The Equal Employment Opportunity Commission has sent a warning to businesses: Conduct criminal background checks at your own risk.

Companies that ask job applicants if they’ve been convicted of a felony or check criminal histories could expose themselves to potential discrimination lawsuits.

“I would suggest to (businesses) that they think long and hard about why they think they need to do a criminal background check,” said John Hendrickson, regional attorney for the EEOC’s Chicago district.

The EEOC in April issued enforcement guidance on the matter that is expected to hold significant sway in court. The commission stated that people cannot be denied employment based solely on criminal histories but stops short of banning the use of criminal background checks.

The EEOC suggests companies consider three things: how long ago the crime was committed, the nature of the crime and how the crime might relate to the job. The agency also said companies should also give ex-offenders a chance during job interviews to explain conviction circumstances as well as rehabilitation efforts.

“Employers should record and document the justification for their employment decisions when they are making the decision with someone with a criminal history,” said Dominic Audino, an Austin labor and employment attorney.

Sometimes there are good business reasons not to hire people with criminal records.

For example, if a job applicant is a convicted embezzler, the company would have a strong case not to hire that person in a financial capacity. But the person might be qualified to hold jobs that don’t deal with money.

Even before the guidance was issued, companies were put on notice that they could be vulnerable to paying damages to people for using their criminal history background against them.

In January, Pepsi was ordered in a court case to pay $3.13 million to black applicants who had been denied work because of past arrests or minor convictions. As a result, Pepsi revamped its hiring procedures.

A 2007 court case triggered the EEOC to look at the issue. In the case, Douglas El claimed he was unjustly fired when his employer learned about a 40-year-old second-degree murder conviction.