Organizations are constantly looking for ways to improve efficiency, streamline processes, and gain an advantage over the competition. As part of that effort, many employers are turning to artificial intelligence (AI) to automate tasks, enhance decision-making, and increase productivity. While AI offers tremendous potential, the drive to achieve faster and better results can sometimes overshadow the need to carefully evaluate how these tools are being used. Without thoughtful oversight and testing, employers may overlook unintended consequences that can arise from AI-driven processes.
It is common knowledge that when an employer uses a third party to run pre-employment background checks, they must follow the FCRA regulations along with any pertinent state, city, or county requirements. This includes making sure to have signed authorization and disclosure forms from an applicant before requesting a background check and following the 2-step pre-adverse/adverse action process when the results of a background check may cause an offer to be rescinded.
However, some employers, including staffing companies, have automated processes for screening and evaluating applicants. The evaluation processes may include scoring or ranking the subjects before considering them for employment. It is easy to make the mistaken assumption that “public records” fall outside of the FCRA requirements, and this assumption can lead to liability for employers.
When staffing companies make decisions on behalf of employers using their scoring system, or the employers use such systems themselves, they have shared exposure. The statues that govern such circumstances look at the reliance on and use of the information obtained. What the processes were “intended” to do does not matter. What does matter is the outcome of the processes.
The problems arise when these automated processes screen applicants using public information early in the process when the applicants have not even been considered for a specific position, or in the case of staffing agencies, specific assignments.
Why is this so important for staffing agencies? Due to the high volume of hiring, the risk for liability is multiplied. In addition, the employers who use staffing agencies multiply their risk when they have scoring, general rejection criteria, and when it is not clear if it will be the staffing agency or the hiring company who will handle the pre-adverse/adverse action process.
While AI is new and some laws must catch up to the processes where AI is involved, information gleaned by AI can be considered third-party information which triggers the FCRA regulations. There is a class action lawsuit against an AI screening company because the FCRA regulations were not part of the process when profiles were created and applicants were ranked.
If you run background checks on applicants and use the background company and/or AI to make hiring decisions for you, make sure you review your internal processes and your processes with your background check provider to ensure all applicable FCRA and other legal requirements are part of the process.
Source: staffingindustry.com