FCRA Requirements For Employers- 09 Nov
You must be aware of the FCRA requirements if you’re an employer. This acronym stands for the Fair Credit Reporting Act and regulates how employers can use credit reports when hiring or firing employees. We will discuss four steps employers must take to comply with the FCRA. We will also provide tips on staying compliant with this law.
What Is FCRA Compliance?
FCRA compliance is the requirement for employers to adhere to the Fair Credit Reporting Act (FCRA) when conducting background checks on prospective employees. The FCRA sets forth specific guidelines and procedures that must be followed to keep employers compliant with federal law. Employers who fail to comply can face civil penalties, fines, and potential litigation.
Steps to Follow for FCRA Compliance
1. Employer Certification
When conducting a background check, employers must certify that they have complied with the FCRA’s requirements.
You must certify that as an employer, you will:
a) ensure that information obtained from a consumer reporting agency is used only for the reasons stated in the disclosure form,
b) handle any disputes or requests for re-investigation promptly and accurately,
c) comply with all applicable state and federal laws governing background checks.
2. Authorization and Disclosure
Before an employer can obtain a consumer report from a CRA, it must first obtain the applicant’s written permission and disclose in writing to the applicant that a background check may be conducted. This disclosure and authorization form should include information about their rights under the FCRA, such as obtaining a copy of their report or contesting any inaccurate findings.
3. Proper Use
By the FCRA, employers must use consumer reports only for purposes related to employment decisions and not to discriminate against any candidate. Employers must also ensure that they are obtaining consumer reports from compliant CRAs as authorized by the FCRA.
CRA is a term used to describe entities that collect, compile, and maintain public records information.
4. Provide Pre-adverse Action Notification
Before taking any adverse action (such as not hiring a job candidate) based on the information in the consumer report, an employer must provide the job applicant with a copy of the report and a “Summary of Rights” under the FCRA. This document will explain to the individual what their rights are when it comes to reviewing their report for accuracy.
The employer must also provide a “Pre-Adverse Action Notice” to the individual, informing them that an adverse decision is likely based on information in the consumer report. The notice should include the following:
• A copy of the consumer report being used by the employer and associated documents
• A statement of the individual’s right to dispute the accuracy or completeness of any information in their consumer report
• Information about how to contact the consumer reporting agency that supplied the report
• A statement that the consumer reporting agency did not make the adverse decision and cannot provide specific reasons.
Employers must adhere to specific laws and regulations when gathering information on potential hires. These rules and regulations are set out by the FCRA, administered by the Federal Trade Commission (FTC), and enforced by state and federal government agencies. Call Total Reporting for the best employee screening services to meet the Fair Credit Reporting Act (FCRA) requirements.