This past year, my family was fortunate enough to visit the beautiful Indiana Dunes State Park. One of the features of the park is a rugged, self-guided, 1.5 mile trail over three of the largest sand dunes in the park. This trail is referred to as the “Three Dune Challenge.” The start of the trail includes a warning that the Three Dune Challenge is the most difficult in the park and is intended only for experienced, physically-fit hikers. Hikers are warned to be realistic about their hiking ability and proceed with caution.
Proceed with caution.
These words of wisdom could certainly be applied to the current challenges faced by organizations in regards to their background screening programs today. In 2014, we saw an explosion of class action lawsuits for federal Fair Credit Reporting Act (FCRA) violations. The FCRA protects applicants and employees from discrimination and employers must comply with the FCRA when using background checks to make personnel decisions, like hiring new employees. From retailers, to trucking companies, no industry is exempt from FCRA violations. Fines can run up to $1,000 per violation and employers are being faced with the potential of paying millions of dollars in damages if they do not comply. This trend does not appear to be slowing down, as major FCRA class action lawsuits have recently been brought against Paramount Pictures, Pizza Hut and Michaels. Employers are currently facing difficulties unheard of in past years due to the newly created Consumer Financial Protection Bureau that is now the chief enforcer of the FCRA. Unquestionably, now is the time to take a realistic look at your FCRA policies and make sure they are one hundred percent compliant. Thankfully, protecting your company is certainly not an insurmountable task.
The FCRA lays out a pretty clear path that employers must abide. Being on the front lines of screening applicants, recruiters can really make an impact on keeping their organizations on the right path to being FRCA compliant. Following these five steps will help to protect your organization:
- Disclosure - A stand-alone disclosure form stating that you are going to be performing a background check on an applicant must be provided prior to conducting any background screening. Companies have been found in violation of the FCRA because they included “extraneous” language on disclosures. The courts have ruled against employers who include disclosures within job applications or who have included release of liability verbiage on disclosure forms.
- Authorization - Applicants must complete an authorization form that permits you to conduct a background check on him/her. It is essential to have a valid signature on this form prior to beginning the background check process.
- Pre-adverse action - If a background report uncovers information that is going to negatively impact an applicant’s ability to get a job, you must first follow the required pre-adverse action procedure. Several organizations have been penalized for not providing applicants with a copy of their report, not allowing applicants a chance to dispute their report, and not providing applicants with the required summary of rights. This is common pitfall that could be easily avoided by utilizing a background check provider that offers an FCRA compliance service which sends pre-adverse action notices. Companies that have opted out of this service have been found in court to have “willfully” violated the FCRA.
- Allow reasonable time for applicants to dispute information - Another complaint against employers has been that they did not provide a sufficient amount of time for applicants to dispute the findings of their report. The FCRA does not specify the exact amount of time employers should allow for applicant’s to dispute information, but it is generally accepted as five working days.
- Adverse action - Applicants must be provided with an adverse action letter, a completed report, a summary of rights, and your Consumer Reporting Agency (CRA)’s contact information.
Protecting your company and remaining compliant with the FCRA can certainly feel like a challenge, particularly when class action lawyers are buzzing around you looking for any small details you may have missed. Fortunately, background companies, like Justifacts, can help by offering a knowledgeable staff and years of industry experience to provide detailed educational information on FCRA regulations. Justifacts offers sample disclosure and authorization forms, a fully automated adverse action tool that can assist clients in generating and tracking the entire adverse action process, and a full time Compliance Team who is available to help handle situations as they arise regarding adverse information that is found on an applicant’s report.
For more detailed information about the FCRA, please download Justifact’s Guide to Understanding the FCRA.
It is important to note that Justifacts is providing this information as a service to our clients. None of the information contained herein should be construed as legal advice, nor is Justifacts engaged to provide legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult your attorney or legal department if you want assurance that our information, and your interpretation of it, is appropriate to your particular situation.