The Federal Trade Commission (FTC) recently published an article outlining some of the requirements of the Fair Credit Reporting Act (FCRA). The article aims to highlight some common issues that employers run into when requesting a background screening report for a prospective employee.
When employers request background information on prospective employees, they’re often covered by the FCRA which is a federal law that regulates how consumer reporting agencies utilize private information. It’s important to note that employers requesting such information under the FRCA are also bound to certain responsibilities such as making certain disclosures to prospective employees and obtaining prior authorization. It can get a little fuzzy when you’re in the middle of the hiring process, so let’s refresh everyone’s memory with a friendly FCRA Compliance Check:
The FCRA has compliance rules for utilizing a background report for making hiring decisions:
- Prior to running a background report, employers are required to disclose your intentions to the prospective employee and obtain written authorization to do so.
- Should a background report reveal something that would cause employers to no longer be interested in hiring someone, the FCRA requires them to notify the individual of the results and provide a copy of the report. Additionally, employers are required to allow a “sufficient amount” of time for the individual to review and contest any of the report’s findings.
- Ultimately, if the employer decides not to hire the prospective employee due to any findings in the background screening report, they’re required to notify the individual that the reason they weren’t hired was due at least in part to the report.
The issue for many employers is understanding the best way to make the required disclosure and obtain the prospective employee’s authorization. It’s important to note that it is acceptable to use one document to make the required disclosure and request authorization as long as it is clearly-worded.
When the FCRA requires a “clear and conspicuous” disclosure, that doesn’t mean it needs to be wordy and complicated. Many employers trip themselves up by using complicated language and adding additional acknowledgments or waivers. Here’s what to not put in this simple document:
- Don’t include language that claims to release your company from liability for conducting, obtaining, or using the background screening report.
- Don’t include a certification by the prospective employee that all information in his or her job application is accurate.
- Delete any wording about requiring the prospective employee to acknowledge that your company’s hiring decisions are based on legitimate non-discriminatory reasons.
- Eliminate overly broad authorizations that permit the release of information not covered by the FCRA.
The additional pieces outlined above will only convolute the document and make it more difficult for the prospective employee to understand the real purpose of the document. If you need to have additional waivers of acknowledgments, do so in a separate document.
Complying with the FCRA’s disclosure requirement for background screening reports should be simple and easy for all parties involved. The prospective employee’s authorization document should be simple as well. All you need to do is include a simple, easy-to-comprehend notification that you will obtain a background screening report and potentially include a simple explanation of what information will be disclosed in the report.