Many employer representatives such as managers, operations, and human resources who are new to background screening think that the Fair Credit Reporting Act (FCRA), which is governed by the Federal Trade Commission (FTC), doesn’t apply to them because they are not running credit checks. All parts of the background are consumer reports under the act regardless of credit checks being included or not.

Company representatives are often thrown into the employment background business without any basic training in the laws that govern the checks. This can be problematic on any given day for an employer, and it is especially important now as the current administration is looking to focus on enforcing the FCRA as a priority.

Employers should provide training to all company representatives who are part of the hiring process and who will use consumer reports as part of that process. This will ensure those representatives are well informed of their duties and obligations. Processes should be documented so that all applicants and employees that fall under the same classification are treated the same when it comes to the background screening.

It should never be assumed that everyone taking part in the hiring process knows the basics, even if the representatives think they do. Sometimes people don’t know what they don’t know. Some of the most basic things often missed can cause big problems for employers and have major financial consequences.

FCRA Compliant Authorization and Disclosure Forms

Before a background check can be requested employers must have FCRA compliant forms completed and signed by the subject. The Disclosure Form is just that, it is a form to disclose to the subject that a background check may be run and what that check might include. This form must be a stand-a-lone document with no “extraneous” information included. Authorization forms may have different requirements depending on the location where the applicant lives or will work.

Two-Step Pre-Adverse/Adverse Action Process

If an employer is considering rescinding an offer based wholly or in part on any of the information contained in the report, they must follow the two-step Pre-Adverse/Adverse action process. The basics of the processes can be found at:

https://www.consumerfinance.gov/rules-policy/regulations/1022/n/#ImageN4

or

https://www.ftc.gov/system/files/ftc_gov/pdf/fcra-may2023-508.pdf

Some locations have additional requirements for the processes that may include specific documentation of how the information was considered and how it pertains to the position for which the subject has applied.

As always, it is important for employer representatives who handle the background screening process to know the laws and regulations for the locations in which the company does business. If you are not sure or if you have not updated your processes and procedures recently you may want to review that information with your corporate counsel.

ASE Connect

ASE Background Checking Services: If you need help with your background screening process or would like a compliance review of your process, please contact Susan Chance.

Sources: consumerfinance.gov, Wiley, ftc.gov