Tag: Compliant employment screening practices

Keeping a Close Eye on Compliance:

FCRA Disclosure and Authorization Forms

No doubt, you already know the Fair Credit Reporting Act (FCRA) has strict regulations in place to govern your pre-employment background screening process—and that failure to meet these regulations when screening your candidates can quickly get you into some pretty expensive legal trouble. It’s no secret that class action attorneys, year after year, continue to pursue employers and Consumer Reporting Agencies that are not in strict compliance with FCRA requirements.

Before we get too much further, let’s take a quick look at why these regulations are in place to begin with.

The FCRA was enacted to help ensure consumer protection

Short and simple. It’s about the privacy of consumer information—knowing what information is collected, and how that information can be used by lenders, credit issuers, and yes, even employers. During background screening, this protection also extends to information like criminal/arrest records.

In short, if you’re a U.S.-based business, of any size, public or private, your pre-employment background screening program is subject to FCRA regulation compliance.

Two important requirements: FCRA Disclosure and Authorization

Employers must begin all candidate background screening with two critical steps:

  • Disclosure: You must properly inform candidates that you will be performing a background screen
  • Authorization: And, you much obtain the candidate’s permission for this background screen

Let’s take a closer look at what is required for both.

Disclosure: Clearly notifying candidates that you intend to perform background screening as part of a wholly informed hiring decision. This disclosure must be clear (direct language, easy to understand), conspicuous (prominent, not deeply embedded in other forms or fine print), and presented as a stand-alone document.

Authorization: Also as a self-contained document, a clear candidate acknowledgement that background screening will be conducted as a pre-employment requirement. This can be presented jointly with the Disclosure, but must be on two separate and printable pages. As part of the authorization, the client will also acknowledge that the company is an equal-opportunity employer and follows all fair hiring practices.

That said, what can go wrong? Well . . . without close attention, a lot!

At most risk, improperly worded presented background check disclosure and authorization forms that do not follow FCRA requirements to the letter are magnets for class action litigation. Like we mentioned above, the FCRA requires clear, conspicuous disclosure as well as candidate written authorization prior to performing a background screen employment. Furthermore—and this is detail attorneys are embracing—FCRA requires the disclosure and authorization forms exist as stand-alone documents. (FCRA section 604(b)(2)).

It is the End User’s responsibility to manage the forms they provide to candidates. Disclosure and authorization forms can typically be signed physically or electronically. However, your company or organization should always consult with your legal team to confirm you are utilizing the appropriate forms, as FCRA regulations evolves over time, as does state-by-state legislation.

A-Check Global has consistently communicated the importance of disclosure and authorization form compliance to our clients. While U.S. employers are ultimately responsible for ensuring their hiring practices comply with federal and state requirements, we’re here to help.

Ask us about our FCRA Form Tool Kit

We offer a convenient Authorization for Background Investigation Form Kit which helps make it easier to comply with FCRA and applicable state-by-state requirements. Our document includes all the components necessary to customize your Forms.

For more information and access to this Tool Kit, please contact us at clientsupport@acheckglobal.com or 1-877-345-2021.

Drug Screening and Marijuana Legalization

Drug Screening and Marijuana Legalization

Should I continue to test my applicants for marijuana?

Across the nation marijuana laws are changing rapidly. Since California became the first state to legalize medical marijuana in 1996, public perception of the drug for recreational and compassionate use has also been shifting quickly.
Since California’s legalization vote, voters and legislatures in twenty-two additional states and the District of Columbia have legalized marijuana for compassionate use. Four of these states have also decriminalized marijuana for recreational use.
Questions concerning the efficacy of marijuana for medical purposes, or the economic impact of legalizing the drug for recreational purposes could be raised in regards to legalization, but in the world of human resources and talent acquisition only one question really matters: Should I continue to test my applicants for marijuana?

Continue reading “Drug Screening and Marijuana Legalization” →

White Paper – Colorado Joins Eight Other U.S. States Restricting Use of Consumer Credit Information for Employment Purposes

Colorado Restricts use of Credit reports for Employment

Effective July 1, 2013, Colorado will join California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington to become the ninth state to pass legislation restricting the use of credit reports in the applicant screening process.  There are approximately 20 other states that have similar pending legislation so we anticipate this trend to continue in the near future.  In response, A-Check is advising Colorado employers that utilize credit reports in their applicant screening process to evaluate and reassess their practices and procedures prior to the law’s effective date including a review of your background screening forms, including but not limited to the Consumer Disclosure/Authorization and Adverse Action notices, to incorporate Colorado’s requirements.

View this Compliance Update as a PDF

What Does this Mean to Colorado Employers?

Who?   The law applies to private sector employers with four or more employees.

Exemptions: Banks and/or Financial Institutions and employers who are required by law to procure consumer credit information can continue to utilize credit reports in their hiring process provided they abide by the new law’s additional adverse action requirements – discussed later in this document.

What?  In general, the new Colorado law prohibits employers from using “consumer credit information” for employment purposes unless the information is “substantially related to the employee’s current or potential job” unless they are one of the exception employers.

Substantially Related to the Position Defined:

  1. A position that constitutes executive or management personnel or their immediate staff with the following job responsibilities:
    • sets the direction or control of a business, division, unit or an agency thereof;
    • owes a fiduciary responsibility to the employer;
    • has access to customers’, employees’ or the employer’s financial information; or
    • has the authority to make payments, collect debts or enter into contracts.
  2. A position that involves contracts with defense, intelligence, national security, or space agencies of the federal government.

How?  How can a Colorado Employer stay in compliance if using a Credit Report?

  1. Ensure the positions you are utilizing credit reports for meet the criteria defined by the legislation.
  2. Provide the job candidate detail regarding the “bona fide purpose” for using credit reports for the position they are applying for.  A-Check recommends you utilize your Consumer Disclosure and Authorization to communicate your purpose to the applicant however, the law is silent as to when this disclosure must be made and does not define the term “bona fide purpose.”
  3. Adverse Action Requirements: The new CO law also expands requirements for employers when taking adverse action based on information in a credit report. Under this law, a Colorado employer is required to (1) provide disclosure to the applicant that it relied on credit information to make an adverse decision, (2) must note the specific information which the employer relied upon, and (3)  must use the same media in which the application was made.   Although the law does not detail when the disclosures must be made, in order to comply with the Fair Credit Reporting Act as well, A-Check recommends that employers do so prior to making any employment decisions.

A-Check Summary

Unless, (1) you are a bank or financial institution; (2) the report is required by law; or (3) the report is substantially related to the employee’s current or potential job and meets the additional requirements detailed above; an employer may not require an employee to consent to a request for a credit report that contains information about the employee’s credit score, credit account balances, payment history, account balances and the like as a condition of employment.

A-Check recommends two considerations when developing your policy and procedures to cover this aspect of your screening:

  1. The current focus of the EEOC is on employment hiring practices that create potential barriers of employment, including the use of credit information in employment. Therefore you may consider that when utilizing consumer credit information to make adverse hiring decisions to make it policy to afford the applicant or employee an opportunity to explain any unusual circumstance that led the occurrence. (e.g. error, lay off, identity theft, medical expenses etc. ).
  2. The Consumer Reporting is quickly changing trending towards increases in regulation.  All employers are advised to be aware of their policies in this respect and to keep abreast of developments in this area of the law.

If you have any questions regarding the contents of this document or for a review of your current Consumer Authorization and Disclosure form, please contact A-Check’s Compliance Department at 877.345.2021 or via email at compliance@acheckamerica.com.

View this Compliance Update as a PDF

For additional information, see article  by Seyfarth Shaw Labor Attorneys Pam Q. Devata and Natascha B. Riesco.

Complimentary Luncheon Presentation: Compliant Employment Screening Practices in California

Topic: What you need to know as a California employer – March 20, Montebello, CA

Join A-Check & AppleOne Employment Services For a Special Complimentary Luncheon Presentation: Cracking the DNA Code to a Compliant Background Screening Process For California Employers.

This informative presentation will be held March 20th at Quiet Cannon in Montebello, CA. RSVP required by March 13th. Click here to learn more.