Background checking? Don’t forget FCRA notices
If you run third-party background checks on applicants or employees, such as checking whether they have any criminal convictions, be sure you comply with hiring laws and the federal Fair Credit Reporting Act (FCRA).
If you run third-party background checks on applicants or employees, such as checking whether they have any criminal convictions, be sure you comply with hiring laws and the federal Fair Credit Reporting Act (FCRA). At Vigilant we often find that employers don’t realize that FCRA compliance means more than just getting an individual’s permission to run the background check. Before you obtain the background check, you must give a disclosure, notifying the person that you plan to obtain a background check, and you must get their specific written authorization to do so.
Once you receive the background report, if there is information on the report that makes you consider taking adverse action against the individual (i.e., deciding not to hire or promote the person), then you must take certain steps before you make your final decision. The FCRA requires you to give the person a Notice of Potential Adverse Action, along with a copy of the report and a notice of their rights under the FCRA. For complete FCRA compliance, you must give the person a reasonable period of time to respond to the notice. This gives them the opportunity to explain or contest the information in the notice. In a recent case, a federal court allowed a new hire to sue a background check company when he was simply dismissed after two days of work, based on a report that incorrectly said he had been convicted of felony murder (McIntosh v. E-Backgroundchecks.com, Inc., ED Ky, March 2013).
If you decide to take adverse action, you must then give the person a Notice of Adverse Action, which must contain specific information. Failure to follow all of these steps could subject you to legal liability from the disappointed applicant, as well as possible civil fines. See Vigilant’s Legal Guide, “Background Checks: Simple Third Party Reports” (1184) for more information. Use our Model Form, “Background Checks: Federal Notices” (5341), for locations in Idaho, Montana, Oregon, and Washington, and our Model Form, “Background Checks: California Notices” (5340) for locations in California.
This website presents general information in nontechnical language. This information is not legal advice. Before applying this information to a specific management decision, consult legal counsel.