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Pre-Employment Screening Part II

Part I of this post discussed some of the reasons why an organization would conduct pre-screening of potential employee candidates and talked about the pros and cons of conducting the screen using in-house resources or outsourcing to a specialist. This post will continue discussion around hiring the best Consumer Reporting Agency (CRA) to help you achieve your goals of hiring the best candidate for the job.

When starting a hiring program of any size you might feel overwhelmed by what is ahead of you. There is the challenge of ensuring a Consumer Reporting Agency (CRA) you hire knows the Fair Credit Reporting Act (FCRA), Driver’s Privacy Protection Act (DPPA), and Health Information Portability and Privacy Act (HIPPA) to ensure your organization is protected and you don’t hire the wrong person. Then there is the Equal Employment Opportunity Commission (EEOC) and Americans with Disabilities Act (ADA) to consider.  That’s a lot to keep in mind while trying to find the best candidate for the job!

The first, and most important, is complying with the first two groups – the CRA and FCRA. We covered the CRA in the first post.  On to the FCRA.

Just what is the FCRA? The Fair Credit Reporting Act (FCRA) is an American federal law, 15 U.S.C. 1681-1681y, which regulates the collection, dissemination and use of consumer information. In Sept 1997, the Act was substantially amended to provide greater privacy protection of consumers and to ensure that information provided about consumers was accurate and complete. You may be asking, “Why should I worry about consumer information when I am hiring someone for a job?” Here’s why – the FCRA covers a wide range of consumer related issues, one of which is pre-employment background checks.

Let’s start with gathering the information on the applicant. Once upon a time, a few phone calls were enough to screen a new employee. Today business owners have growing concerns about security, corporate scandals, workplace violence, embezzlement or thefts that makes pre-employment screening more important and essential than ever before. Before you delve into a background check of your applicant, remember this is a specialized area needing specialized resources and knowledge. Firms risk legal liability if the procedures utilized to gather data on a potential employee infringe on legally protected areas of privacy. The solution is retain the services of a Consumer Reporting Agency (CRA) Simply put, a CRA is an agency (or company) that is entitled to collect and disseminate information to be used for various purposes including employment, and have a responsibilities under the FCRA which include:

  • Use FCRA approved and accurate databases to obtain information on the consumer (applicant). This information is included in a Consumer Report. A consumer report for employment includes criminal and civil records, past law suits, driver’s record (which must be Driver’s Privacy Protection Act – DPPA approved), reference checks, and other information obtained by the CRA.
  • CRAs must investigate disputed information, and if necessary, correct the error within 30 days of receiving notice of the disputed information.
  • CRAs must inform the consumer (applicant) of negative information through adverse action procedures within 30 days of finding out that information.
  • A CRA may not retain negative information only as stipulated by the FCRA.
  • A CRA must have a reference verified by an employment agency or other CRA in order to meet FCRA guidelines.

How do you know which companies are regulated by the FCRA? Many databases such as Lexis, Westlaw, ChoicePoint, and IRB do NOT create credit reports and, as far as I know, and are not FCRA and DPPA approved. They may gather the same types of information and, as a result, may subject some of their actions to the FCRA, “even if the only information it collects, maintains, and disseminates is obtained from ‘public record’ sources.” Section 603(f) of the FCRA.

The question that begs to be asked, then, is why would you use a company that only has access to public records (the key word here is public) and not a more specialized private record database that is FCRA, DPPA, and HIPPA approved? Once a CRA has been selected, the employer must certify to the CRA that the employer will follow all the steps set forth in the FCRA. These include:

  • The information will be used for employment purposes only.
  • The employer will not use the information gathered in violation of any federal or state equal employment opportunity laws or the Americans with Disability Act.
  • The employer will collect the necessary disclosure and consent forms from the employee candidate.
  • The employer will give the necessary notice to the employee candidate in the event that an adverse action is taken.
  • The employer will give additional information required by law if an Investigative Consumer Report is necessary.

Civil liability for willful or negligent violations of the FCRA can be very costly to say the least. Under Subsection 616 of the Act, (15 U.S.C. Subsection 1681n) a consumer (applicant) may recover either actual damages or a minimum of $100 to a maximum of $1000 plus punitive damages and reasonable attorney’s fees and cost for willful noncompliance with the Act. The recovery for a negligent violation is of actual damages plus attorney and other applicable legal fees. Under Subsection 616 of the FCRA, suit can be filled in state or federal courts and the statute of limitations is the earlier of 2 years from discovery and 5 years from the violation. PLEASE NOTE: the above information is not intended to give or offer legal advice in any manner, please consult an attorney for any legal issues or questions you have.

True, the FCRA in its entirety can pose a number of time delays and costs in complying with the Act; however considering the litigation costs and fines for failing to comply, and the real chance of hiring the wrong person, an employer who fails to do background screening is taking a great risk both personally and professionally.

Now that you and your CRA have met all of the legal requirements, and the report is in, it is up to you to make the hiring decision. Remember, as complicated as it may seem, the FCRA is designed to protect you, as well as the applicant, and to provide you with the best chance of making an informed hiring decision.

Need further information? Please contact Sandy at Gold Shield Legal Investigations, Inc.

The Fair Credit Reporting Act (codified at 15 U.S.C. ss 1681).

Federal Trade commission.

The Washington Times.

Copyright © 2010 Sandy Glover

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