Take even just a quick glance at the Hire Image newsfeed, and you won’t be able to miss the barrage of stories about employers with class action lawsuits alleging violations of the Fair Credit Reporting Act (FCRA) to newer and more restrictive state, county, or city-specific laws that impose additional responsibilities during the hiring process. The legal requirements by which employers must abide are becoming increasingly convoluted and duplicative as laws are implemented at every level of government. Over the past year, many large employers, Wells Fargo, Chuck E. Cheese, and Home Depot to name just a few, have been tripped up by avoidable mistakes. From background check disclosure forms riddled with extra information, to the lack of a signed authorization, or improper adverse action steps, judges determined that basic FCRA rules had been broken.

Imagine adding into the mix all of the special requirements associated with local laws, and the risk of non-compliance increases exponentially. Much like a pilot ensures a safer flight by completing a pre-flight checklist EVERY time, HR professionals can reduce the risk in their background screening programs by committing to following a step by step process. Hire Image has developed COMPLY to clarify the required steps and provide a repeatable process that should be applied with every background check.

Candidate notification (stand-alone disclosure)

Obtain candidate’s signed authorization AND provide

Mandatory FCRA summary of rights and state disclosures

Pre-adverse notification (if applicable)

Leave time for candidate to dispute

You decide. Hire, or Not (send adverse action letter)

Candidate Notification

One of the most common violations cited in FCRA lawsuits has to do with a disclosure that doesn’t meet requirements. Prior to obtaining a background check report for employment purposes, a clear and conspicuous disclosure must be made in writing to the applicant, notifying them that they may be the subject of a background check. The disclosure document must consist solely of the disclosure and, therefore, should never:

• Include release of liability language or any other extraneous information
• Be embedded in other hiring documents such as the employment application
• Include state specific disclosures or notices

Obtain Candidate’s Signed Authorization

An applicant’s signed consent must be collected prior to initiating a background check. The signature can be collected on paper or electronically. If you utilize an online system that manages capturing the signature, it is important that the system meets the requirements of the Federal E-Sign Act. The Hire Image system meets these requirements, but if you use another provider or ATS system it is important to verify that their technology complies with E-Sign. Certain states require additional authorization as well.

Mandatory FCRA Summary of Rights and state disclosures

Prior to initiating a background check, applicants must receive a copy of the FCRA summary of rights. It is important that the most current version of the document is in use at all times. Even seemingly minor issues are considered a violation. Some states also require that applicants be provided with specific disclosures or notifications.

Pre-Adverse notification

If it is determined that you will not hire someone based in whole or in part on contents of the background check report, you MUST:

• Provide notice in writing to the applicant. The notice must include:
  • Name, address, and toll free number of the background screening agency that produced the report.
  • A statement that the background screening agency did not make the decision to take adverse action and cannot provide specific information as to why action was taken.
• Provide a copy of the FCRA summary of rights
• Provide a copy of the background check report.
• Provide information and/or documents required by state or local law- this could include but is not limited to, listing the specific information from the report that is the basis for potential action and enclosing locations specific notices.

Leave time for dispute

The FCRA states vaguely that a “reasonable” amount of time must be allowed for dispute prior to taking final adverse action. It is generally acknowledged that a reasonable amount of time is not required to exceed 5 business days from the time the applicant reviews a copy of the report. If the applicant disputes information on the background check report, the background screening agency has up to 30 days to re-investigate and submit new information if applicable. If the applicant doesn’t dispute, final adverse action can take place once the dispute period has ended. Implementing a dispute period of 7 business days will cover nearly all jurisdictional situations. However there are several locations with unique dispute time requirements.

You Decide – Hire or Not (send adverse action notice)

Once you’ve received new information from your background screening agency in the case of a dispute, or the dispute period has expired, the final decision can be made regarding whether or not employment will be denied or an offer rescinded. This final step also requires that you:

• Provide notice to the applicant in writing. The notice must include:
  • Name, address, and toll free number of the background screening agency that produced the report.
  • A statement that the background screening agency did not make the decision to take adverse action and cannot provide specific information as to why action was taken.
  • Notice of the applicant’s right to receive a free copy of the report by submitting a written request to the consumer reporting agency no later than 60 days after receipt of the notice
• Provide information and/or documents required by state or local law- this could include but is not limited to, listing the specific information from the report that is the basis for potential action and enclosing locations specific notices.

While COMPLY can help remind you to complete each step in the background screening process, it is only a guide. Hire Image does not provide legal advice and this information doesn’t cover every possible nuance of the screening process or your legal obligations for compliance. We recommend that you work closely with your employment attorney and background screening agency to verify that your program and processes address the various laws at each level of government.