Background Checks, Part Two: The Law, Best Practices, and Your Organization

Best Practices

Welcome to part two of our ongoing blog series covering the growing number of laws regulating pre-employment background screens. As your trusted partner, we’re here to keep you as compliant as possible, and welcome the opportunity to provide information through our blog. Haven’t read part one yet? You can read it here.

Engage a Trusted, Consultative Background Screening Company

The ideal background check is accurate, comprehensive, consistent, timely, and of course, legal. Coordinating these factors can be expensive and time-consuming, and the work involved differs depending on the location of the candidate and where he or she has lived in the past. For these reasons, most companies do not conduct their own background check but outsource this function to third parties—like A-Check Global—referred to as consumer reporting agencies.

Obligations Before Running a Background Check

The FCRA imposes legal obligations on companies that use background check reports which protect candidates from being denied employment because of incomplete or inaccurate information in their background check reports (“consumer reports”). Companies must ensure that an individual 1) knows that a background check is being conducted; 2) consents to having a background check conducted; and 3) is provided notification that information contained in the background check report may result in an adverse employment decision. Therefore, companies must obtain or provide the following:

  • Disclosure for Consumer Reports: Whenever an employer seeks to obtain a consumer report, the FCRA mandates that, before doing so, it must make a clear conspicuous written disclosure, separate from the application, to the candidate that a consumer report may be obtained. This must be given in a separate document, consisting solely of the disclosure, before a check is requested. This has been the subject of increased litigation in the last couple of years.
  • Candidate Authorization: An employer must also obtain the written authorization of the candidate prior to requesting a consumer report. As a best practice, companies should have their forms reviewed at least annually by counsel.
  • Certification to CRAs: A company must certify to the CRA that prior to ordering the consumer report, it will distribute the required written disclosure and obtain the required written authorization. The company must also certify that the information being obtained will not be used in violation of any federal or state equal employment opportunity law or regulation. Lastly the company must certify that it will comply with the adverse action requirements set forth in the FCRA and described below.

Obligations After Receiving a Background Check

  • Pre-Adverse Action Notification: Before taking any adverse action, such as not placing a candidate on a temporary or contract assignment, based in whole or in part on information in the consumer report, a company must notify the candidate that it is considering taking an adverse action based in whole or in part on information contained in the consumer report and provide the candidate with 1) a copy of the consumer report obtained from the CRA; 2) a summary of the candidate’s rights under the FCRA; and 3) any state specific notices. Currently a handful of jurisdictions, including New Jersey, New York, Massachusetts, New York City, Los Angeles, and Washington State, require additional notices. Additionally, several ban-the-box laws require employers to state the reason they are considering taking an adverse action (if the decision is based on criminal history) or to identify the potentially disqualifying criminal record.
  • Adverse Action Waiting Period: After providing the pre-adverse action notice, an employer must wait a “reasonable period of time” before taking the adverse action. The FTC has opined that a five-business-day waiting period is reasonable. The FCRA is clear that candidates should be given the “opportunity to be heard” to correct or challenge incorrect information on a consumer report before an employer actually takes adverse action.
  • Adverse Action Notification: After waiting a “reasonable period of time”, an employer must provide the candidate with 1) notice of the adverse action taken; 2) the name, address, and toll-free telephone number of the CRA that furnished the consumer report; 3) a statement that the CRA did not make the decision to take the adverse action and is unable to provide the specific reasons the adverse action was taken; 4) notice of the candidate’s right to obtain a free copy of the consumer report from the CRA within 60 days; and 5) notice of the candidate’s right to dispute the accuracy or completeness of any information in the consumer report furnished by the CRA. Additional notices may be required in some jurisdictions and, as with the pre-adverse actin notice, several ban-the-box laws, including those in California; New York City; Seattle; and Portland, OR (among others), require employers to state the reason they are taking an adverse action (if the decision is based on criminal history)or to identify the disqualifying criminal record.

Stay tuned for part three of this blog series to learn more about background screening best practices.

Reference

Devata, P. & Mora, J. (2018) Background Checks: A Primer for Staffing Firms on Complying With Federal, State, and Local Laws. [Issue Paper]. American Staffing Association

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