What Employment Background Screening Companies Should Know About FCRA?
Updated: Oct 22, 2020
If your company is in the business of compiling background information for employment purposes, it’s likely you’re covered by the Fair Credit Reporting Act. Are you following reasonable procedures to assure accuracy, getting required certifications from your clients, and complying with other FCRA provisions?
Background screening reports are “consumer reports” under the FCRA when they serve as a factor in determining a person’s eligibility for employment, credit, insurance, housing, or other purposes and they include information “bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.” Companies that sell or provide those reports are “consumer reporting agencies” under the FCRA. So even if you don’t think of your company as a consumer reporting agency, it may be one if it provides information about people to employers for use in hiring or other employment decisions.
If your employment background screening company is a consumer reporting agency under the FCRA, what does the law require you to do?
Follow reasonable procedures to assure accuracy. Among other things, the FCRA requires you to establish and follow “reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.” Certain practices may be indicators that a background screening company isn’t following reasonable procedures. For example, if a report lists criminal convictions for people other than the applicant or employee – for instance, a person with a middle name or date of birth different from the applicant’s – that raises FCRA compliance concerns. Other indications that a company’s procedures might not be reasonable include screening reports with multiple entries for the same offense or that list criminal records that have been expunged or otherwise sealed.
Get certifications from your clients. Consumer reporting agencies may provide consumer reports only to those with a specific permissible purpose, like employment. So verify that your clients are legitimate and get them to certify that they will use the reports only for employment purposes. In addition, the FCRA gives job applicants and employees the right to know that information about them is being reported to employers or potential employers.
Therefore, you must get certifications from your clients attesting that:
The employer notified the applicant and got the applicant’s written permission to get a background report;
The employer will comply with the FCRA’s requirements; and
The employer won’t discriminate against the applicant or employee, or otherwise misuse the information in violation of federal or state equal opportunity laws or regulations.
Provide your clients with information about the FCRA. The FCRA requires you to provide your clients with information about their responsibilities under the statute (Notice to Users of Consumer Reports) and a summary of consumer rights under the FCRA (A Summary of Your Rights Under the Fair Credit Reporting Act), which you can provide with the background screening report or before providing a report. These are standard documents available from the Consumer Financial Protection Bureau.
Honor the rights of applicants and employees. The FCRA gives consumers certain rights with which you must comply. For example, you must give them access to their files when they ask for them, conduct a reasonable investigation when they dispute the accuracy of information, and give them written notice of the results of investigations. It’s a violation of the FCRA not to respond in a timely way to consumers’ inquiries and disputes. Another FCRA violation: creating unreasonable obstacles for consumers trying to exercise their rights under the FCRA.
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