The Idaho House on Monday killed legislation from the state Department of Labor to allow it to conduct FBI background checks on employees, even though the bill sponsor warned that the state could lose millions of dollars the department relies on to pay federal unemployment benefits. Rep. Heather Scott, R-Blanchard, decried the bill as “an example of federal bullying,” and Rep. Lynn Luker, R-Boise, questioned whether it was too broadly worded. Rep. Dorothy Moon, R-Stanley, declared, “I have a real issue with data collection being obtained in the state.”

Georgia Smith, spokeswoman for the state Department of Labor, said late Monday, “We are trying to move as quickly as possible to review our options and come up with an alternative.”

HB 164 would have authorized the department to conduct FBI fingerprint-based background checks, which include a 50-state criminal record check, citizenship verification, and local law enforcement checks everywhere the employee has lived, work or attended school in the past five years, on employees, applicants, contractors, interns and others. Those checks are required by the IRS for any employee who has access to confidential taxpayer information that taxpayers provide to the IRS when they file their taxes.

Smith said the legislation doesn’t address data collection. “It’s about protecting everybody’s federal tax information,” she said, “and making sure that the people who have access to that data have cleared an FBI fingerprint-based background check.”

The department currently has 26 employees who have access to that data as part of the Treasury Offset Program, which goes after unemployment overpayments that occur through fraud or misrepresentation by putting a hold on the taxpayer’s income tax refund. Participation in that offset program is mandatory for all states; since 2013, Idaho has recovered $9.5 million in overpayments.  Failure to comply with the background-check requirement could potentially jeopardize millions in federal funding that Idaho receives to administer its unemployment benefit program; last year, Idaho received $13.8 million. You can read my full story here at spokesman.com.