Things to Know

What to Know About FCRA Compliance

The Fair Credit Report Act (FCRA) was introduced by the Federal Trade Commission (FTC) to regulate how online background checks are conducted. Sometimes referred to as a consumer report, background checks may include criminal, driving, educational, credit and identity verification reports.

Before You Order a Background Screening Check

Prior to requesting a consumer report, or background screening check, the requesting party must certify that the report will be used strictly for employment purposes, such as to help assess whether to hire a job applicant or promote an existing employee, and when an investigative background report includes personal interviews, applicants must be informed of their right to receive a description of the investigation. In addition, the requesting party cannot violate any federal or state equal employment opportunity law and must provide a clear disclosure to the applicant or employee and obtain the applicant’s consent before ordering a consumer report. If the background check results in adverse action taken against the applicant, the notice must be provided. Finally, the party requesting the background report should be familiar with any applicable state statutes concerning background investigations that may supplement the FCRA. Two such states are California and New York. Read more about New York and California’s background check laws.

 

FAQ’s

Why should I run background screening checks on job applicants? Is it required?
There is no law that requires all companies do a background check. However, there are special laws for specific jobs that do require a criminal record check. For instance, a background check is mandatory for any job with the trucking industry, law enforcement, or a job that involves contact with children, disabled persons, or elderly persons.

Regardless of whether the law requires it, a background check is an great investment to minimize the risk of harm to your association and its members from the wrongful acts of those who were trusted. Checking an applicant’s credit and history of past criminal conduct will enable you to avoid hiring the wrong person and will help prevent theft, embezzlement,  violence, and liability for negligent hiring. Background reports are also used to verify an applicant’s qualifications and trustworthiness so that you have valuable information to help you hire the right person.

How many companies use pre-employment background checks?
According to the Society for Human Resource Management (SHRM) 69% of companies, big and small, reported that they conduct criminal background checks on all job applicants.
Why should I use a background screening company?
A reputable background screening company provides the guidance and appropriate forms that will ensure you are in compliance the FCRA employment laws. In addition, In addition, background screening compnies have access to multiple databases that provide comprehensive information about a job applicant and verify that the information collected is accurate.
What can I learn from a background check?
There is no one standard background report that works best for all industries. Different industries, and even different companies within an industry, may use different information to evaluate a candidate. A typical background check may include:

  • Criminal records
  • Education verification
  • Credit history*
  • Social security verification
  • Driving records
  • References
  • Past employment
  • Workers comp
  • Medical history**

Certain industries may require more comprehensive reporting, but at a minimum we recommend employers check references, criminal history, and education. Other reports such as credit history, drug testing, and driving reveal additional information about an applicant’s general trustworthiness.

*Some states have special laws regarding credit history searches for employment purposes.

** The FCRA requires that the applicant consent to a medical history report. The medical report must also be relevant to the job.

How much does background screening cost?

Background screening costs vary depending on how comprehensive the report is and how many reports are requested.  Our affiliate offers three different packages that cover the most commonly requested reports plus the ability to purchase “a la carte” reports that can be added to a particular package report or purchased separately. Prices range from $29.95-$69.95 for the packages and from $4.95-$39.95 for the a la carte reports.

Does a job applicant have to consent to a background check?

Yes, the applicant must receive a disclosure form and sign an authorization form. Pre-employment background checks must be conducted carefully and in compliance with privacy laws and regulations as stated by the Fair Credit Reporting Act.

How should we determine which background check is right for our company?

Our pre-packaged reports offer the most commonly requested reports but it is important to evaluate your needs when deciding on the specific infomation that is desired about a person’s background.  A credit check may not be necessary when hiring a person who does not have access to your funds, but would be valuable when hiring a person who will sign on your bank accounts. Similarly, a check of a person’s driving record may not be important for most hirings, but would be when hiring a property manager who is required to use a vehicle as part of his or her job.  We will gladly provide a free consultation concerning your particular needs to help you make the right dicision on the reports to obtain.

How long does pre-employment background screening usually take?

Certain reports can be obtained nearly instantly, while other reports may take 2-7 days. For instance, any report that requires manual verification such as drug testing, county courthouse records, and reference checks may take 3-5 days.

How far into the past do screenings go?
The FCRA and state laws dictate how far into the past screenings can go. Criminal convictions have no federal limitation. Information about bankruptcy has a limitation of 10 years and all other adverse information has a limitation of 7 years. However, there are some states which may impose a different limitation. The reports provided by our affiliate cover seven years.
How often should background checks be run?

Typically, background checks are performed prior to the final decision on a job hiring, and some jurisdictions have laws that prohibit inqiries about criminal history and background checks until the final stages  of a hiring.  In addition to investigations that are conducted pre-hiring, it is a good practice to perform background checks: on promotion or transfer from one job to another that has different job requirements; and periodically during the person’s tenure with your association (every year), as people do not generally volunteer negative information about things that have occured in their life (unless an employee volunteers information about a new criminal charge, there is no way to be certain that their record has remained clean).

Can I decline an applicant based on a criminal record?

Yes, but you cannot treat criminal history differently for different applicants, otherwise it could be considered discrimination as defined in Title VII of the Civil Rights Act of 1964. For a full list of guidelines for declining applicants based on a criminal record visit www.eeoc.gov/laws/guidance/arrest_conviction.cfm.

What happens if I choose to decline a job applicant based on the background check?

Denying an applicant a position based on information that is contained in a backgorund report is “taking adverse action” and involves two steps prior to making a final decision: (i) the first step is to provide a copy of the background check report and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act” to the applicant in order to provide the applicant with an opportunity to contest the content of the report; (ii) if no action is taken by the applicant, or if the company makes a final decision to not hire the applicant, the company must send a final letter of adverse action to the applicant. Samples of the pre-adverse and adverse action letters that comply with FCRA guidelines are available.

What are the FCRA guidelines for checking references?

An employer can run what is known as an “investigative consumer report” to check the person’s reputation, character, or mode of living by conducting interviews with people who know the applicant. However, the employer and background screening company must follow additional rules. The employer must give the applicant a written notice that the report will include an interview and the employer must notify the applicant of their right to request more details about the report. If the applicant wants to know the specific nature of the reference interviews, the employer must give the applicant that information within 5 days of receiving the request from the applicant.

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