The Federal Trade Commission enforces the Fair Credit Reporting Act (FCRA), which outlines what you must do when requesting a background check for pre-employment.
To start, before you request the background check, you must tell the applicant and get permission from them. These 2 things must happen using documents that contain no “extraneous” information and are in a stand-alone disclosure format.
Small Details Lead to Big Lawsuits
These may seem like small details from a large act. But an increasing number of class-action lawsuits are being filed against companies that failed to comply with the details of the FCRA. Companies are paying millions of dollars for, what is usually, one small slip-up. Here are a few of examples:
- Last year, Waffle House was accused of not providing a copy of the background check to potential employees that were not hired due to the information in the check
- A lawsuit against Kelly Services Inc. alleged the company violated the FCRA’s stand-alone disclosure requirement. The case was settled earlier this year for $6,749,000
- In 2014, it was alleged that Michaels Stores Inc. (the craft supply retailer) didn’t properly disclose to job applicants that the company regularly performed background checks on potential employees during the application and screening process
Mitigating the Risk
How do you ensure that your company always follows all of the rules and regulations set out in the FCRA when requesting background checks? You hire a trusted company with lots of experience. A background checking company who will work with you to ensure compliance with, not only the FCRA, but also your state laws. A company like Accurate Information Systems.
Kelly Services Inc., and Michaels Stores Inc., are just a couple examples of companies that allegedly didn’t follow all of the rules before requesting a background check. There are far more rules in the FCRA regarding what must happen once you receive the report, including what you can use the information for, how and when you can take “adverse” action, and how to dispose of the report.
More information about the FCRA, including the stand-alone disclosure requirement, is available on the Federal Trade Commission’s website: https://www.ftc.gov/tips-advice/business-center/guidance/using-consumer-reports-what-employers-need-know.
If you need a trusted company to run your background checks for pre-employment please give us a call at 1-(800)-295-7109 or download a sample report here: https://www.accinfosys.com/pre-employment-background-screening/