What Does It Mean To Be FCRA Compliant?- 28 Mar
What does it mean to be FCRA compliant? And what are your responsibilities as an employer to stay compliant?
The Fair Credit Reporting Act (FCRA) is a federal law that was enacted in 1970 to help consumers deal with inaccuracies in their credit reports. In 1996, the law was expanded to include other reports including background reports for employment screening purposes. Today, FCRA compliance is mandatory for any employer using a third party to conduct background checks.
Among it provisions, the FCRA includes the following to protect consumers:
-Consumers have the right to be informed and provide consent when an employment background check is going to be performed
-Consumers have the right to review any information complied on them from these checks and correct any inaccuracies that it may contain
-Consumers have the right to know when their personal data is used in decisions that will affect them
-Consumers have the right to appeal those decisions if they feel that they were made unfairly
As an employer, when you are choosing a background check provider you need to ensure that your provider is a certified FCRA-compliant Credit Reporting Agency (CRA). Aside from choosing a quality, certified CRA, employers also play a critical role within several steps of the background check process.
Your FCRA responsibilities as an employer include:
–FCRA-permitted purpose: The Fair Credit Reporting Act states that employers are only allowed to conduct background checks on employees or potential hires with the purpose of determining fitness for a position. This includes routine background checks to ensure that new charges or findings have not occurred for current employees or employees that are being considered for a promotion or new role within the company.
(Make sure that your purposes for running a background check fall within these guidelines. You should not run a background check on employees for personal reasons or reasons that fall outside of determining fitness for employment.)
-Disclosure & Consent: In order for a background check to be legal, the employer must provide all candidates (including current employees) with a written disclosure of their plans to conduct the background check. This disclosure must be presented on its own—not handed over in an orientation packet or with a collection of other papers. For employers wishing to run a background check on a potential job candidate under review, they must also obtain a signed consent form from the candidate before instructing a CRA to conduct a background check.
(Please ensure that your screening candidate is aware that a background check will be performed on them in order to avoid any liability issues.)
-Share results with the candidate: Upon completion of a background check and before making a final hiring decision, employers must inform candidates of their rights under the FCRA and offer them to opportunity to review (and dispute if necessary) any information within their report. (We always include this information in our authorization forms and offer to send a consumer copy electronically if requested.)
-Consider Equal Employment Opportunity Commission rules to findings review: Under the federal Equal Employment Opportunity Commission (EEOC), employers are banned from excluding potential hires based purely on past arrests or criminal records (unless directed otherwise by state or federal regulations) if the offense is not relevant to an applicants ability to perform their job. Employers should also remember to pay heed to various states “ban the box” regulations which can forbid them from asking about criminal records until after serious hiring consideration.
(Be sure to take each applicant on a case-by-case basis. Consider what the job requirements are, their personal character, if they have completed any rehabilitation programs, or if they have performed well in similar roles before.)
-Follow proper 2-step adverse-action procedures: If a background check does contribute to a decision against hiring, retaining, or promoting a candidate, an employer must issue the candidate written notice. This notice is knows as a pre-adverse action notification and gives the candidate a chance to refute or explain any findings before a hiring decision is final.
(Total Reporting is happy to provide guidance on this process. Our state of the art platform will also help create pre-adverse notifications for you to help streamline your process.)
-Finalize the hire: Once background checks have been conducted, any disputed facts have been corrected as needed, and candidates have been notified of any adverse actions (and given the chance to respond), an employer can then make the final hiring decision and notify all candidates of their final decision.
Here at Total Reporting we always work to stay up-to-date on all of the latest industry changes and updates to keep our clients on top of things. If you have any questions on how to stay FCRA compliant, please feel free to reach out to 844-515-5075 or firstname.lastname@example.org.