Our company has just started completing background checks on new hires. The vendor who provides our background checks has a notice posted on their website reminding users to follow up with candidates according to the Fair Credit Reporting Act (FCRA). We don’t do credit checks on new hires - does this apply to us? What do we need to do?
Background checks are a must if a company wants to ensure a good hire. Thanks to some great vendors out there, companies can get very good background check results without breaking the bank. However, there are a few stipulations that must be followed to be in compliance with FCRA. This process needs to be followed for all types of consumer reports (i.e. criminal history, driving records and credit reports).
Before obtaining the background check, you will need to inform the candidate of their rights. This entails giving them a Fair Credit Reporting Act Disclosure statement, in writing, that provides notice of their rights and informs them that a consumer report may be used to determine their employability. They must sign this disclosure as well as a separate written release authorization to perform the consumer report investigation. A number of companies incorporate the release authorization into their employment application. Some consumer reporting providers prefer to have it as a separate document so that the candidate is well aware that a consumer report investigation is being performed.
Once the consumer report is obtained, if ANY of the information in the consumer report is a factor in your decision (even if it is not the deciding factor) you must provide the candidate with a Pre-Adverse Action disclosure that includes a copy of the candidate’s consumer report and a copy of â€œA Summary of Your Rights Under the Fair Credit Reporting Actâ€. Our background check vendor supplies a letter that explains this process to go along with these items when they are sent to the candidate. When you finally fill the position, any candidate who has been in consideration (has had a background check) and not chosen, needs to be sent an Adverse Action letter notifying them of the decision. The letter needs to include: the name and address of the consumer reporting company that provided their consumer report(s), a statement that the reporting entity did not make the â€œadverseâ€ employment decision, and provide the candidate with their rights to dispute the information and how they can obtain a copy of a free credit report. This information must be provided to the candidate, even if the information in the consumer report wasnâ€™t negative. The regulation also stipulates that the candidate needs to be notified once the position is filled.
If you are using a reputable background check company, they should help you by providing forms and documents needed to fulfill your obligations under FCRA. For more details and specific guidelines for the follow up notifications, please visit http://www.ftc.gov/bcp/menus/consumer/credit/rights.shtm.