Two steps in hiring process too important to ignore
There are several steps in the hiring process, and the desire to move things along quickly is understandable. But an auto parts retailer recently learned that shortcuts can be costly, especially when it comes to background checks.
The retailer agreed to pay $950,000 to resolve Fair Credit Reporting Act (FCRA) violation claims that the company did not secure valid authorizations prior to conducting applicant background checks.
Plaintiffs in a class action lawsuit also claimed the retailer violated the FCRA by allegedly including extraneous information on its disclosure forms. The FCRA is clear in stating that these forms need to be clear “stand-alone” documents and not mixed in with other forms or information.
What does the FCRA say about disclosure forms?
The FCRA requires that a disclosure consist solely of the statement that a background check (called a consumer report when ordered from a third-party provider) may be obtained for employment purposes.
Although the required disclosure and authorization forms may be combined in a single document, the Federal Trade Commission (FTC) has warned that “the form should not include any extraneous information.” Thus, the form cannot be attached to a job application, or combined with any other authorization forms (e.g., liability waivers for reference checks).
Another crucial step
If an employer decides to reject a job applicant based on a third-party consumer report, the employer cannot just move on to the next candidate.
Denying employment to someone based on information uncovered by a third-party consumer report is an “adverse action.” Before taking such an action, the employer must give the individual a pre-adverse action disclosure that includes a copy of the individual’s consumer report and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act.”
The Consumer Financial Protection Bureau (CFPB) updated this summary document on March 17. Employers should make sure the Consumer Reporting Agency (CRA) that furnished the individual’s background report uses the up-to-date summary of consumer rights.
This latest version replaced the version, which was published in October 2018. And there are English and Spanish versions of the Summary available on the CFPB’s website. The Summary must be included with every pre-adverse action notice.
The CFPB’s changes to the Summary include minor revisions to correct contact information for various federal agencies. The CFPB also revised the Summary to update references to obsolete business types, such as “Federal Land Banks,” and to make other technical corrections.
Key to remember: To ensure compliance during the hiring process employers must secure valid authorizations prior to conducting applicant background checks and follow through with the proper pre-adverse action documents if they decide to pass on an applicant due to information in the background check.