FOLLOW THE LINK BELOW FOR THE MANDATORY FCRA FORMS
Understanding FCRA rules for employment screening
We are often asked about the legal rules and regulations involved in beginning employee
background checks. Here we attempt to explain some of the basics involved, in particular the Fair
Credit Reporting Act. Disclaimer: We are not lawyers and specific situations may vary. Please
consult with your attorney before implementing any screening program.
The federal rules regarding employment screening are contained in the Fair Credit Reporting Act. At
a minimum, your screening program must conform to these rules. (State-specific rules may also
apply. The FCRA has two primary goals with respect to employment:
Ensuring that people are explicitly notified, and agree to, any background checks that are done, and
allowing people to correct any misinformation before any decisions are made by the employer.
Job candidates must sign a release form agreeing to permit a background check before it is
performed. The most common background checks are criminal record checks, credit reports, and
driving records. The release form must provide “clear and conspicuous” disclosure, which is
generally interpreted as requiring a separate page rather than burying it in the rest of the job
application.
What happens if they are not willing to sign? You cannot perform the background check in that
case…but you are not required to hire them, either. It is very important that you have a consistent
policy on this to avoid any charges of discrimination.
If you find out information in the course of doing the background check that causes you to take
adverse action against the candidate, certain rules must be followed. Adverse action can be broadly
defined — failure to hire, termination, decision not to promote, and so on. It is best to err on the side
of caution here. If the report will cause you to treat the candidate or employee in any negative way,
adverse action rules apply.
For adverse action, the employer must do the following:
Before taking the adverse action, give the individual a copy of their report and a copy of the
Summary of Your Rights Under the FCRA (PDF reader required).
After taking the adverse action, you must tell the individual that adverse action has been taken. This
notice must include contact information for the consumer reporting agency (CRA) that provided the
report, and a statement that the CRA cannot explain why the adverse action was taken. You must
also tell them they have the right to dispute the facts in the report, and that they are entitled to an
addtional free copy of their report from the CRA for the next 60 days.
An excellent summary of rules for employers using background checks is available at the FTC
website.
We are often asked about the legal rules and regulations involved in beginning employee
background checks. Here we attempt to explain some of the basics involved, in particular the Fair
Credit Reporting Act. Disclaimer: We are not lawyers and specific situations may vary. Please
consult with your attorney before implementing any screening program.
The federal rules regarding employment screening are contained in the Fair Credit Reporting Act. At
a minimum, your screening program must conform to these rules. (State-specific rules may also
apply. The FCRA has two primary goals with respect to employment:
Ensuring that people are explicitly notified, and agree to, any background checks that are done, and
allowing people to correct any misinformation before any decisions are made by the employer.
Job candidates must sign a release form agreeing to permit a background check before it is
performed. The most common background checks are criminal record checks, credit reports, and
driving records. The release form must provide “clear and conspicuous” disclosure, which is
generally interpreted as requiring a separate page rather than burying it in the rest of the job
application.
What happens if they are not willing to sign? You cannot perform the background check in that
case…but you are not required to hire them, either. It is very important that you have a consistent
policy on this to avoid any charges of discrimination.
If you find out information in the course of doing the background check that causes you to take
adverse action against the candidate, certain rules must be followed. Adverse action can be broadly
defined — failure to hire, termination, decision not to promote, and so on. It is best to err on the side
of caution here. If the report will cause you to treat the candidate or employee in any negative way,
adverse action rules apply.
For adverse action, the employer must do the following:
Before taking the adverse action, give the individual a copy of their report and a copy of the
Summary of Your Rights Under the FCRA (PDF reader required).
After taking the adverse action, you must tell the individual that adverse action has been taken. This
notice must include contact information for the consumer reporting agency (CRA) that provided the
report, and a statement that the CRA cannot explain why the adverse action was taken. You must
also tell them they have the right to dispute the facts in the report, and that they are entitled to an
addtional free copy of their report from the CRA for the next 60 days.
An excellent summary of rules for employers using background checks is available at the FTC
website.
| CLICK HERE TO GET THE MANDATORY FCRA FORMS FOR INCLUSION IN YOUR HIRING PACKAGES |
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