What Employers Need To Know About Running Background Checks That Are FCRA Compliant

September 2017

Employers, landlords, hiring managers and others who use background information to make decisions about applicants must comply with a variety of federal laws designed to protect the rights of consumers and aid in the prevention of discrimination. One of those laws, the Fair Credit Reporting Act (FCRA), lays out a number of duties for anyone relying on third-party screening firms to provide background information.

If you work with a company that provides  background checks for information on applicants, what steps must you follow to ensure FCRA compliance?

Use Information Only for Allowed (permissible) Purposes

Hiring managers conducting pre-employment background checks must ensure that any reports they order are for employment purposes only. Employment can include a variety of tasks, including transfers and promotions, and it can apply to contractors and volunteers in addition to full-time and part-time employees.

Provide Written Disclosure

Employers seeking consumer background screening data  must notify applicants that the information may be used to make decisions related to employment. Disclosure must be provided in writing and remain separate from other employment application materials, and consist solely of the disclosure.

You may not include other supplementary information in the disclosure; for instance, you shouldn’t include a waiver or hold harmless language as part of your consumer disclosure related to background checks. However, the additional information may be included as a separate component of the overall application as long as it doesn’t impede on the “standalone nature” of the consumer disclosure and its corresponding consent document.

If you request a report classified as investigative — using personal interviews as sources and seeking information related to an individual’s reputation, character or lifestyle — you also must disclose to the applicant that he or she has a right to receive a description of the nature and scope of the information provided.

Obtain Applicant Consent

Before you request a background screening report for an employment or tenant screening purpose, you must get consent from the applicant allowing you to obtain a consumer report. Permission from the applicant  must be provided in writing for you to complete the background check.

You can obtain the written authorization as part of the form that discloses to the applicant that you will be seeking background information. If you want additional background reports throughout an individual’s term of employment, you will need to state your intention in a clear and conspicuous manner to obtain reports on a continuing basis, except in CA, which does not allow for an ongoing or “durable” consent, but instead requires that you update the applicant or employees consent within 30 days of each and every inquiry of their consumer report.

Make Certifications to the Screening Company

As the purchaser of consumer reports, you are required to provide certification to the screening company that you will seek reports only for allowable reasons. In addition, you must certify that you have clearly disclosed your intent to the applicant and obtained appropriate consent before ordering the report. This is referred to as giving disclosure and receiving consent.

You also attest that you will not use consumer reports in a way that violates any state or federal laws related to equal opportunity. In addition, you certify that if you make a negative decision related to employment based on information contained in the report, you will follow appropriate procedures for adverse actions. In an employment context this is a two-step process, whereas in a tenant screening context only a single-step adverse action process is required.

Handle Negative Employment Decisions Properly

If you use negative information from a background report to make an adverse employment decision — such as firing a worker or withdrawing a job offer — the FCRA requires that you complete certain steps.

Before you take the adverse action, you are required to provide the employee or applicant a copy of the Consumer Report along with a Pre-Adverse Action Letter and a Summary of Rights Under the FCRA, and then wait a minimum of at least 7 business days before taking a final, “Adverse Action”, which requires delivery of a second letter, known as the Adverse Action Letter.

Providing the information in advance of the adverse action gives the individual the opportunity to respond and give an explanation or otherwise work to have any potentially erroneous information contained in their consumer report investigated and corrected. After you complete an adverse employment action, you’re required to notify the applicant of the rejection due to information contained in the report, including contact information for the company that provided the report. You also must alert the applicant that he or she can dispute the information in the report and receive a free copy of the report from the reporting firm for the next 60 days. Protecting the rights of the consumer should be paramount to any respectable consumer reporting agency and should be a primary focus for any employer or prospective landlord

Dispose of Information Securely

After you meet all recordkeeping requirements, the law allows you to dispose of background reports in a secure manner that is FCRA compliant.  Proper disposal can include pulverizing, burning or shredding paper in a way that it cannot be read.

Global Verification Network offers comprehensive background screenings to provide human resources professionals, landlords, and financial services managers and others with the information they need to make sound decisions. To find out more about our services or to request a quote, please  contact Global Verification Network.

The following is provided as a courtesy to those interested parties who wish to know more about executing screening services in a compliant fashion, but also keep in mind that we are not attorneys, nor can we disclose or render legal advice. The items we mention are for internal discussion and reflection and should be vetted by legal counsel for any interested party. GVN provides this information based upon their knowledge and understanding of the FCRA and its implication on client companies and their consumers. At all times GVN strives to maintain the protection of a consumers rights while delivering to its clients actionable data which helps them make better informed hiring, engagement and retention decisions.

Sources

https://www.precheck.com/blog/fcra-compliance-what-employers-need-know-running-background-checkshttps://www.eeoc.gov/eeoc/publications/background_checks_employers.cfmhttps://www.ftc.gov/tips-advice/business-center/guidance/using-consumer-reports-what-employers-need-knowhttps://www.ftc.gov/tips-advice/business-center/guidance/disposing-consumer-report-information-rule-tells-howhttp://globalverificationnetwork.com/what-we-do/background-checkshttp://globalverificationnetwork.com/contact-us/

 

 

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