Here’s the scenario: Your company performs a pre-employment background check. It obtains the properly signed “separate and distinct” employee disclosure and authorization form that is required. The background screening report, i.e., the consumer report that is provided by the background screening company indicates that your employee applicant is a convicted murderer (or is convicted of some other egregious crime). You tell the applicant that you cannot hire them due to their criminal conviction. Period. That’s all you do. Perhaps, you even send a letter (one letter) stating that fact. Given this scenario, your company has just violated the Fair Credit Reporting Act (FCRA), the federal law that regulates background checks.

The Fair Credit Reporting Act imposes very detailed disclosure requirements, especially with employee screening, on the employer and also on the background screening company. In addition to the initial “separate and distinct” employee disclosure and authorization form, there is a requirement to provide two (2) Adverse Action Notices, if the employer takes any Adverse Action due to the information from the background screening report (referred to as the “consumer report” in the FCRA). Adverse Actions are defined as any action that negatively impacts the individual, based upon the results of the consumer report.

Adverse Actions with employee screening include to fire, to not hire, to demote, or not promote an individual employee/applicant. When the Adverse Action is the result of the findings in the background screening report, the employer must first provide a “Pre-Adverse Action Notice.” This Notice must not categorically state that an Adverse Action is or will be taken (the most it can state is that an Adverse Action is being contemplated). Further it has to include a copy of the consumer report, the “FCRA Summary of Rights”, and the contact information for both the employer and the consumer reporting agency.

After waiting at least five business days subsequent to the “Pre-Adverse Action Notice” being sent, if the employer actually plans on taking the Adverse Action, then the employer must send the second “Adverse Action Notice.” Some courts have ruled against employers that only waited four business days as not sufficient notice to the consumer (and have imposed statutory fines and punitive monetary damages upon the employer). Of course, if the consumer disputes the background screening report, the “Adverse Action” letter should not be sent until the dispute has been investigated and verified.

It should be noted that any information obtained from the interview process (and not from the background screening report) is not governed by the FCRA. Neither one of the above Adverse Action Notices is required if the Adverse Action is based only upon the interview process, and the information that the consumer freely disclosed to the employer. It is important to use a reliable background screening company that is also a consumer reporting agency. This will help keep your organization in compliance with the FCRA, and also safeguard consumers who are being background checked to ensure their rights under the Fair Credit Reporting Act, should the consumer need to dispute their background screening report.

Posted by: Rudy Troisi. President, Reliable Background Screening.