Following FCRA regulations to avoid litigation... Don't be afraid, just be aware.
ou have heard it from us before, and it is something we need to keep repeating. Class action lawsuits for Fair Credit Reporting Act (FCRA) violations are on the rise. The interesting thing is, in some of these cases, no consumers were even harmed by the actions that occurred. The case was simply about the employer or Consumer Reporting Agency not following FCRA regulations regarding the background screening process.
important takeaway from the information we receive about these cases is to continue to consistently follow FCRA regulations when it comes to screening, and make sure to stay up-to-date on any changes in regulations or guidance that may occur.
As a reminder, the main FCRA obligations include, among other requirements for the employer:
- a permissible purpose for ordering reports (such as employment)
- a signed Disclosure and Authorization form from the applicant (prior to screening) which is a stand-alone document from the application (see more info about Disclosures below)
- a requirement for employers to send Pre-Adverse and Adverse Action Letters and a copy of the background report upon denying employment/promotion due to information in the background report
What kind of lawsuits have come from non-compliance with FCRA regulations? Here are a few examples:
- An employer was sued for having applicants sign a Disclosure and Authorization Form after the background screen reports were processed. FCRA Regulation: The employer is required to obtain signed Disclosure and Authorization forms prior to processing a background screen on all applicants.
Several employers have faced litigation for not providing an adverse action letters and copy of the completed report to an applicant they did not hire.
The employer is required to send a Pre-Adverse Action Letter along with a copy of the applicant's background screening report prior to making an adverse decision and then wait a reasonable time period to allow the applicant to respond. If the applicant does not dispute the records, the employer must then send an Adverse Action Letter stating that the decision not to hire or promote has been made, based on the information in the report.
- Employers have faced litigation for having the Disclosure and Authorization included as part of the employment application. FCRA Regulation: The Disclosure and Authorization Form must be a "clear and conspicuous disclosure" in a document consisting solely of the disclosure (and not combined with any other documents).
This can all seem pretty scary, and it can be if you are unaware of your responsibilities under the FCRA. However, there are actions you can take now to make sure you are compliant in all aspects of the regulations. In order to assist with FCRA compliance, we have listed a few resources for you to reference.
You can also contact us anytime with questions.
Background Checks: What Employers Need to Know: In an effort to help employers understand their responsibilities, the EEOC and FTC have provided an overview of compliance information in regard to screening (see link below). This document is a simpler version of regulations, and can assist in understanding the requirements of the FCRA.
Background Checks: What Employers Need to Know
Notice to Users under the FCRA:
The full version of the FCRA regulations can be found at the link below, and can be used in conjunction with the document provided above.
Additional Client Resources: Additional client resources can be found at the Occuscreen website, by clicking on the following link:
While FCRA compliance can seem like a daunting task, and the thought of it may make some employers want to skip the screening process altogether! It is important to remember, however, that background screening is an essential part of hiring and provides confidence and knowledge about potential employees, while assisting you in avoiding negligent hiring lawsuits. Your background screening provider, legal counsel and HR consultant should be resources you can rely on regarding FCRA regulations and compliance within your organization.
FCRA Questions? Please contact us at 888-833-5304
MORE ON DISCLOSURE AND AUTHORIZATION
As you saw in the example above, the Disclosure and Authorization forms themselves must be compliant or a claim can be made against the employer.
Changes and updates on forms
Legal advice and updates regarding information required on the Disclosure and Authorization forms change regularly. If you are an Occuscreen client and do not have an updated Disclosure and Authorization form from 2015, please request a form by
: There has also been a very recent minor change to the FCRA Summary of Rights, which is one of the documents required to be given to the applicant along with the Disclosure and Authorization forms. To access the updated copy of the Summary of Rights, click
What is a compliant form?
While many background check providers offer sample forms as a service to their clients, some employers prefer to use their own forms, reviewed by legal counsel. These forms are acceptable, provided they are compliant. To help you understand the requirements, we have outlined a few Do's and Don'ts in regard to customized forms.
"Do List" (Must have following information listed on the form):
- List the Consumer Reporting Agency (background provider) information (name, address, toll-free phone number, website) no both the Disclosure Form and Authorization Form
- A definition of a consumer report or investigative report (i.e. credit history, character, general reputation)
- List specific types of information that will be collected (i.e. criminal history, driving records)
- Include the state regulations for the state the applicant lives in (as applicable)
- The Disclosure Form should be a clear and conspicuous disclosure in a document consisting solely of the disclosure
- Font should be legible and size of font should be consistent throughout document
"Don't List" (Remove any of the following from the document):
- Cannot contain a Release for Liability (for any party)
- Cannot be part of the application or any other document
- Should not include additional releases, documents or unrelated information (i.e. acknowledgement of company policies, certifications that the information provided by the applicant is true/correct, questions regarding prior criminal history, etc.
Need Help with FCRA Compliance?
- Online Help Desk with state-by-state info
- Up-to-date and compliant Disclosure and Authorization forms (paper and electronic)
- FCRA Certified Screeners
- Client Education and Industry Updates
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we move into the fall and winter holidays, we wanted to give you advance notice of our holiday schedule for 2015:
Occuscreen Holiday Hours are as follows:
November 26 and 27 - Closed
December 24 - Open with Early Close (6:00am - 12:00pm PST)
December 25 - Closed
December 31 - Open with Early Close (6:00am- 12:00pm PST)
January 1st - Closed
Wishing you a wonderful season!