DISCLOSURE REQUIREMENTS: Fair Credit Reporting Act (FCRA) – The federal law that governs background checks

When employers perform employee background checks, they are subject to the Fair Credit Reporting Act (FCRA). This occurs even if the employer does not obtain a credit report, but simply purchases a criminal background check from any background screening company. The FCRA imposes specific disclosure requirements upon employers, which include:

  1. An applicant authorization for the employee background check must be obtained in a separate and distinct disclosure, whose sole purpose is the background screening authorization. It cannot be part of the employer’s general employment application. Additionally, it must contain the correct FCRA-mandated disclosure language.
  2. If an Adverse Action is taken based upon the Consumer Report (the report obtained from the background screening company), the employer must first provide a ” Before Adverse Action” Letter before waiting a minimum of 5 business days to provide the “Adverse Action” Letter. (NOTE: Some courts have ruled 4 business days to be unreasonable and NOT sufficient to comply with the FCRA rules).
  3. Adverse Actions include:
  • To not hire (for an employee applicant)
  • To terminate (for an existing employee)
  • To not promote, or to demote (for an existing employee)

It should be noted that anything uncovered during an interview process (in person or via phone) is NOT covered by the FCRA. If the Adverse Action is based solely upon the interview and/or anything the employee discloses, and NOT the Consumer Report, then the requirement to send the “Before Adverse Action” and “Adverse Action” letters is eliminated

NOTE: Although the above deals with employee screening, the information below is relevant to other types of background checks, such as franchisee screening, membership screening, etc.

“BEST PRACTICES” DEFINED

“Best practices” generally means checking for criminal records under all legal names, and for all counties an individual has lived in over the past seven years. The six issues listed below further clarify how and why a “best practices” background check should be performed.

  1. Always screen the exact first and last Legal Name and Date of Birth, and include the middle name, if there is one. These items should be confirmed against a government-issued ID (usually a driver’s license). If the ID is worn and could have been altered, require that the individual obtain a new one to help ensure that the information being screened is valid. Most criminal records are returned by matching the First, (Middle) and Last Names and Date of Birth. If the individual applies under a nickname, always process the Legal Name.
  2. Maiden names should be checked for married individuals who took their spouse’s surname. If you only check the married surname, you will generally NOT uncover crimes committed under the maiden name (unless you also check the maiden name).
  3. If the surname is a compound name, i.e., two (2) last names, you should check both surnames (as you would with a maiden name).
  4. It is important to obtain Court information, not just Department of Correction (DOC) data. DOC files typically include those individuals who have served prison time. However, you also want to find individuals who have been convicted of crimes, but were given only probation and no jail time. You need Court information to uncover convicted criminals who received only probation (but were not incarcerated).
  5. “National” criminal database checks do NOT cover the entire USA. No company has a national criminal database that covers 100{5460a4de8013038d4595608f48191d314818d6c27f4872c4c47bcc9e4b7b3c2b} of the USA… they simply do NOT exist, no matter what background screening company you use. It is, therefore, important to supplement your criminal check with any additional jurisdictions that need to be searched, based upon where your applicant has resided (these addresses will be revealed by an Address Locator product, such as a Social Trace or Social Search).
  6. The Federal Court system always requires a separate search. Federal Criminal Records Searches are never part of any county criminal records search or any criminal database search. Federal crimes often include so-called “white collar” crimes — crimes of financial fraud — such as money laundering, tax evasion and embezzlement, but they can also include other crimes such as racketeering and drug trafficking.

How to select a background screening company

  1. Ensure that the company is a consumer reporting agency. They need to be to help keep you in compliance with the FCRA, and to provide sample disclosures, both the initial authorization and the Adverse Action Notices.
  2. Does the company inform you about your FCRA-mandated disclosures.
  3. Does the company review reports, and your online input to ensure that you receive a thorough criminal check. This is important to ensure that counties where the applicant has lived are covered for the criminal check, and to ensure that the names being searched are valid, i.e., to prevent “garbage in – garbage out.”
  4. Be wary of the low cost provider, i.e., you may “get what you paid for.”

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