If your company needs to hire one or more new employees, you probably want to conduct background checks to make sure you are hiring people who are honest about their qualifications and do not have lengthy criminal records. When obtaining a background check through a consumer reporting agency, you must follow the Fair Credit Reporting Act. This federal law grants job applicants and current employees certain rights and sets out requirements that employers need to follow. Your state law may spell out other rules and requirements.
Why You Need to Be Careful to Follow the Law
If you fail to follow the FCRA, your company can be sued by a candidate who was denied a job. You can also be sued for violations of state laws. In many cases, the problems are systemic and companies find themselves subject to class action lawsuits. Those lawsuits can cost hundreds of thousands or even millions of dollars, depending on the extent of the problem and the number of plaintiffs.
Laws on Consent and Disclosure
One of the most common reasons for a FCRA lawsuit is a violation of the rules regarding consent and disclosure. You must always obtain a job applicant’s written consent before you conduct a background check. The authorization and disclosure forms must be in a separate document. That information cannot be a part of the application or another form. The consent and disclosure form should specify what types of information will be collected, the name of the consumer reporting agency that will conduct the background check, and how the company can be contacted. It cannot include any other information that is not directly relevant to the background check.
Adverse Action Laws
If you are thinking about rejecting an applicant because of information found in the background check, you must send the candidate a pre-adverse action notice along with a complete copy of the report and a summary of the applicant’s rights under the Fair Credit Reporting Act. Then you must send an adverse action notice after you have made a final decision. This should include information on how the applicant can dispute the information if he or she believes it is inaccurate.
Follow Your State’s Background Check Laws
State laws on background checks vary. Some state laws give job applicants additional protections and set out additional responsibilities for employers. Make sure you are complying with the laws in your state to avoid becoming the defendant in a lawsuit.
How to Conduct Background Checks
A background check can help you find the most qualified employee, but it needs to be done correctly. Take the time to learn about the applicable federal and state laws and job applicants’ rights so you can comply and avoid being sued for mistakes that could have easily been avoided.
DataCheck has helped businesses of all kinds conduct pre-employment background checks. We can help you comply with relevant laws. Contact DataCheck today to learn more about our background check services.