Can You Ask Employees or Contractors to Pay for Their Own Background Check?

Many employers, recruiters, and agencies understand that the cost of background screening can add up. But can the applicant just pay for it themselves?

The answer is sometimes. No federal law determines who has to pay for an employment background check. But several states have laws requiring the employer to cover it. And even where charging is legal, wage rules and practical problems can turn a small savings into a big headache as to whether employees should pay for their own background check. 

Varying Laws

• Federal law does not delegate on who pays. The Fair Credit Reporting Act (FCRA) controls how background checks are run. It says nothing about who writes the check.
• Some states do address who pays. In those states, charging the applicant is illegal.
• Wage laws can still block it. You usually cannot take the cost out of a paycheck if it drops someone below minimum wage.
• Contractors are a gray area. The rules are murkier for 1099 workers. The safest path is to treat them like employees.

The bigger risk is letting contractors buy their own check and hand you the results. When that happens, you get a document you cannot trace. The safer approach is to order every check yourself through your screening provider and follow the full FCRA process. That means giving the person a clear disclosure, getting their written permission, and following the required steps before and after you make a decision based on the report. You can still pass the cost along to the contractor if that fits your business. The important part is that you control the order, the record, and the timing. Have a lawyer review your disclosure wording, since some attorneys suggest avoiding standard “employment purposes” language for 1099 workers so you do not weaken your case that they really are contractors.

What About Deducting the Cost from their Pay?

Under the Fair Labor Standards Act (FLSA), you generally cannot deduct a business expense from an employee’s pay if that deduction pushes their earnings below the federal minimum wage or cuts into overtime pay. The U.S. Department of Labor covers this in its fact sheet on deductions from wages. This rule matters most for hourly and entry-level roles. 

States That Require the Employer to Pay

A handful of states have laws that block employers from charging applicants or employees for criminal history or background check costs. The list generally includes:

• California. State wage law bars employers from making workers cover the costs of doing business, and screening fees are widely read as falling under that rule.
• Iowa. Criminal history check fees must be paid by the employer.
• Kansas. Employers cannot require applicants to obtain their own criminal records from state agencies.
• Kentucky. Employers cannot require an employee or applicant to pay the cost of furnishing records the employer requires.
• Louisiana. Employers cannot pass along fingerprinting or record costs as a condition of employment.
• Minnesota. State law says an employer “may not require an employee or prospective employee to pay for expenses incurred in criminal or background checks, credit checks, or orientation.” You can read the statute itself at Minnesota Statutes 181.645.
• Vermont. Employers cannot require an applicant to obtain, submit, or pay for a copy of their own criminal conviction record.
• Washington, D.C. The employer is required to pay the fees charged by the entity providing the results.

One important caveat: state laws change, and the details differ. Some of these rules apply only to certain industries or certain types of records. If you hire in more than one state, check the current law in each one, or ask an employment attorney, before you build a pay-your-own policy.

What About Independent Contractors?

Courts have split on whether the FCRA’s employment rules cover independent contractors. Several federal district courts have said the law’s employment protections stop at employees, because “employee” carries its normal legal meaning. The FTC has taken the opposite view, saying the FCRA’s employment purpose can reach non-traditional workers like contractors, freelancers, temps, and volunteers. SHRM has a good breakdown of how the FCRA applies to independent contractor background checks.

Because of that split, most screening professionals recommend a hybrid approach: follow the FCRA’s disclosure, authorization, and adverse action steps for contractors too, while using contractor-specific wording on your forms.  If you control how a contractor works, including making them pay for and complete your screening on your terms, that can become one more fact supporting a worker misclassification claim. Saving $25 is rarely worth a misclassification fight.

Some models are different by design. Volunteers, gig workers, and people in registry or marketplace settings often pay for their own screening because they own the result rather than any single employer. That structure is common and generally accepted. It works because the individual is the actual customer, and it should not be treated as a workaround for regular hiring.

Even Where It’s Legal, Should You Do It?

Employers do have real reasons to consider passing the cost along. Screening expenses grow as hiring volume grows, and in high-turnover roles a company can end up paying for essentially the same check over and over. In some marketplace or registry models, a portable check that the worker owns and carries between placements is genuinely useful.

Most employers still skip it. Charging a fee shrinks your applicant pool, because $25 is a real barrier for someone applying to an hourly job, and your strongest candidate may simply apply somewhere else. It also looks bad. Asking people to pay to apply reads as unfair, and word travels through reviews and referrals. On top of that, it adds administrative work, since you are now collecting payments, tracking receipts, and issuing refunds to candidates you end up declining. Finally, it creates compliance risk. Multi-state employers have to keep track of which states allow the practice, and those rules can change.

The Mistake to Avoid: Accepting a Check the Candidate Bought

This one comes up constantly, and it is the most expensive mistake in this whole topic.  If you tell a candidate to “go run your own background check and send me the results,” you have traded a small cost for a real risk. Here’s why:

• You cannot verify it. You have no way to know the report is complete, current, or authentic.
• You lose your compliance trail. The FCRA requires a standalone written disclosure and the applicant’s authorization before the report is pulled. It also requires specific pre-adverse and adverse action steps if you decide against hiring based on what you find. A report the candidate bought on their own leaves you without that record.
• The report may not be built for hiring. Consumer-facing “check yourself” products fall outside the FCRA-compliant employment screening category.

If you want the applicant to bear the cost, do it the right way. Use a screening provider that offers an applicant-pay option, where the check still runs through your compliant workflow with proper disclosure and authorization, and the results come to you directly.

A Compliance Checklist Before You Charge Anyone

Run through these five questions first:

1. Does the state allow it? Check every state where you hire.
2. Will it be deducted from pay? If so, confirm the deduction keeps the employee above minimum wage and leaves overtime pay intact.
3. Is the fee disclosed up front? Applicants should know the amount before they apply, not after.
4. Is your FCRA paperwork still correct? A standalone disclosure and signed authorization are required no matter who pays.
5. Is the payment handled through your provider? Never accept a report the applicant sourced on their own.

Frequently Asked Questions

Can an employer legally charge a job applicant for a background check? In most states, yes. No federal law bans it. But several states, including California, Minnesota, Iowa, Kansas, Kentucky, Louisiana, and Vermont, plus Washington, D.C., restrict or prohibit it. Check the law in every state where you hire.

Can I deduct the background check cost from an employee’s first paycheck? Only if state law allows it and the deduction keeps the employee at or above minimum wage without reducing overtime pay. Some states also require written authorization for any wage deduction.

Can I ask an independent contractor to pay for their own check? Often yes, but the legal picture is less settled and it can add weight to a misclassification claim. Many companies treat contractors the same as employees to stay on the safe side.

Can a candidate just send me a background check they ran on themselves? You should not rely on one. It bypasses the FCRA disclosure and authorization steps, you cannot confirm it is accurate or current, and it leaves you without a compliance record.

What does a background check usually cost an employer? It depends on the searches included. Basic packages can start around $12 to $25 per applicant, while more thorough criminal and civil bundles cost more.

Need screening that fits your budget?

Sure Check Background Screening is an FCRA-compliant consumer reporting agency serving franchise networks, senior care, childcare, home services, and staffing. Our packages start at $12 per applicant, most checks return in under eight hours, and we offer a compliant applicant-pay option when that model genuinely fits your program.

Get a quote or call Maggie at 773-417-6725 or maggie@surecheckbackground.com

This article is general information and should not be relied on as legal advice. State laws change and vary by industry. Consult an employment attorney about your specific hiring practices.