Fair Credit Reporting Act and Employment Background Checks

Posted on: December 16, 2014

In this article we will continue to look at the different requirements that the FCRA imposes on users of background checks in the employment setting and the rising tide of litigation surrounding the use of employment background checks without proper compliance procedures in place.

Specifically, we will focus on the rules an employer must follow when considering taking adverse action against a candidate or employee based even partly on information contained in employment background checks. Failing to follow proper adverse action procedures has become a top target for class action litigation.

The Pre-adverse Action notification requires that before making the final decision the employer must:

  1. Provide notice to the candidate that they have received a background check that contains information potentially disqualifying them from the position in question.
  2. Provide the applicant a copy of the report itself.
  3. Provide the applicant a copy of the “Summary of Consumer Rights under the FCRA.”
  4. Along with the Pre-Adverse action notification, the candidate must be provided with the name, address, and telephone number of the consumer reporting agency that procured the background report, as well as a statement notifying the candidate that the consumer reporting agency did not make the decision to take adverse action and is unable to provide reasons or information pertaining to the action itself.

The candidate may dispute the information provided by the consumer reporting agency allowing for any misreported, outdated, or otherwise incorrect data to be corrected.

The Adverse Action notification can begin after a “reasonable amount of time” has passed from the initial notification, and must:

  1. Be accompanied by a copy of the background report.
  2. Include a copy of the “Summary of Your Rights under the FCRA.”
  3. Must include a notification that the candidate is being disqualified from potential employment based on the results of employment background checks.

Ensuring that your company is completely FCRA compliant can generally be accomplished by working closely with a quality employment screening provider (consumer reporting agency) and competent legal counsel. Many consumer reporting agencies have comprehensive and tested programs already in place to accommodate their clients’ adverse action procedures.

About the Author:

Matthew J. Rodgers, PHR is the President of iprospectcheck.com, a background screening company that specializes in fast, accurate, compliant and affordable screening solutions for employers.