Background checks help employers identify potential causes for concerns among new candidates, make smarter hiring decisions and protect their organizations from risk. But before conducting background checks, employers need to make sure that their process respects their candidates’ rights and follows certain requirements, including Fair Credit Reporting Act (FCRA) background check requirements.
The FCRA requires the employer to give each candidate a clear and conspicuous disclosure form, consisting solely of the disclosure; before running a background check on their behalf. Under the FCRA, employers must also obtain authorization to conduct the background check and notify candidates of their rights under the FCRA.
Employers who fail to comply with provisions in the FCRA may be subject to lawsuits, fines, and reputational risk. In this post, we’ll tell you what you can (and can’t) include in your disclosures, tell you what disclosures are required for adverse action processes, and how to minimize your legal risk when conducting background screening. Read on for all that and more:
What is a background check disclosure?
A background check disclosure is a document that lets a candidate know the employer will be conducting a background check on the individual for employment purposes. The background check disclosure provides precise details on the background check and discloses that the employer may request a consumer report.
What employers need to know about FCRA background check requirements
The FCRA is a federal law that regulates the use and collection of consumer information, which applies directly to credit reports, consumer reports (“background checks”), investigative consumer reports, and more. This means that employers must provide the required disclosure forms to minimize hiring risks and protect their organization.
Before your organization conducts a background check, you should follow these steps:
*Note, this blog post should not be construed as legal advice and you should always consult an attorney before starting or altering the background check process.
Step 1: Provide a disclosure form to all candidates
The FCRA requires the disclosure form to be a stand-alone document that provides notice to the candidate that a consumer report may be obtained for employment purposes.
This form may include what searches will be included in the background check.
The FCRA requires that employers provide a “clear and conspicuous” written notice, which means that your disclosure form must contain easy to understand language.
Certain states, such as California and New York, may also have their own disclosure requirements. Check out each state’s requirements before deploying your own disclosures.
Step 2: Receive authorization from the candidate
Employers are not allowed to conduct a background check on an employee or candidate without receiving authorization. You will need to provide and receive a separate document for the authorization, which will request written consent for a background check.
What not to include in your disclosure forms
Compliant disclosure forms cannot contain any extraneous or irrelevant language, such as information around job requirements, release of liability, or adverse action process. Including any additional information can land you in hot water with the FCRA, so it’s best to steer clear of liability.
Adverse action disclosure requirements
The FCRA also imposes disclosure and authorization requirements for employes considering taking adverse action against a candidate or employee based on information uncovered by a background check.
According to the EEOC and FTC’s guidance, employers must take the following steps before taking an adverse employment action (rescinding an employment offer or terminating/demoting an employee):
- Employers must give the candidate/employee a notice that includes a copy of the consumer report used to make your decision
- Employers must also give them a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act”
Giving the candidate or employee a notice in advance gives the person a chance to review the report and explain any negative information.
After taking an adverse employment action based on information reported by a background check, you must tell the applicant or employee):
- that he or she was rejected because of information in the report
- the name, address, and phone number of the company that sold the report
- that the company selling the report didn’t make the hiring decision, and can’t give specific reasons for it;
- and that he or she has a right to dispute the accuracy or completeness of the report, and to get an additional free report from the reporting company within 60 days
Follow FCRA background check requirements with Accurate
Following these disclosure and authorization requirements ensures that you’re running background checks only on candidates that have consented to screening — and it minimizes your legal and compliance risk under the FCRA.
Accurate delivers up-to-date disclosure forms and jurisdiction-specific forms that make it easier for you to stay compliant with state and federal laws governing background screening, while minimizing your legal risk and keeping your business safe. We partner this with a compliance team that provides education and updates you on key legislation. Contact us now to build the best background screening program for your business.
