Building Better Background Screening Programs
In the past ten years, legal actions brought against employers for their background screening practices have alleged very similar violations of certain portions of the U.S. Federal Fair Credit Reporting Act (FCRA), its state analogues, and related law and regulation. Based on this litigation history, employer due diligence is especially important in these high risk compliance areas.
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Resource: In February 2014, the Equal Employment Opportunity Commission (EEOC) and Federal Trade Commission (FTC) jointly published Background Checks: What Employers Need To Know. Demonstrating the importance of compliance, the stated purpose of the publication is "explain[ing] how to comply with both the federal nondiscrimination laws and the FCRA."
Per Sections 604 and 606 of the FCRA, a "clear and conspicuous disclosure" must be made to the consumer (the candidate for employment or continued employment) in a document that "consists solely of the disclosure" that a consumer report (background report) may be obtained for employment purposes. Violations cited in legal actions allege inclusion of extraneous information by employers such as waiver of liability, information related to the employer, and/or the employment process thus resulting in failure to meet the "solely" requirement. Also cited as an alleged violation is placement of the disclosure within a multi-page employment application, thereby failing to meet the "conspicuous" requirement of the FCRA.
Note: A 1998 FCRA amendment clarified that the disclosure and authorization may be combined in a single document.
FCRA Section 604 requires that an employer obtain written authorization from the candidate for employment before a background check is initiated. Alleged violations include failing to obtain authorization, obtaining authorization after the background check has been initiated, using ambiguous language, and failure to meet the "clear and conspicuous" requirement of the FCRA.
Note: Special provisions are made for positions under the authority of the U.S. Secretary of Transportation.
Per FCRA Sections 604 and 615, before an employer may make an adverse employment decision based in whole or part on the background report, the candidate must have the opportunity to dispute and correct information in the report. Alleged violations include failure to provide pre-adverse and adverse action notices, failure to provide a copy of the background report to the consumer, and failure to provide proper consumer rights documents.
Separate from the FCRA, the U.S. Equal Employment Opportunity Commission (EEOC) has cautioned employers against automatic disqualification of candidates based on criminal or credit history and has provided guidance to employers for conducting "individualized assessment" of candidate criminal history information. Under the theory of disparate impact, the EEOC has alleged violation of Title VII by employers for their use of disqualification policies and improper use of criminal records.
State FCRA Analogues and Related Law.
Many states have their own version of the FCRA. In some cases, these state laws impose requirements beyond those of federal law, such as inclusion of special language or a "check box" for requesting a copy of the background report. In addition, enactment of ban-the-box laws has become common at the state and city level. These ban-the-box laws create additional employer compliance requirements regarding inquiry into criminal history, as well as requirements related to the use of criminal records and adverse action processes.