FCRA Employment Background Check Compliance

Employer's Guidelines For FCRA Background Check Compliance

Most businesses use an employment background check company to conduct employment background checks on job applicants and employees.
Employers must comply with the federal Fair Credit Reporting Act (FCRA). The employer's compliance responsibilities are set forth in the document published by the EEOC and FTC entitled:

"Background Checks what employers need to know."

FCRA Compliance Basics

1. You must have a Permissible Purpose - You may only order background checks for employment related purposes such as hiring, retention, promotion, transfers, including volunteers, contractors, etc.
2. You must properly Disclose - In a written document, separate from any other application or document, inform/disclose to the consumer that a background check may be obtained as a condition of employment. The disclosure must not be combined with any other form except the authorization.
3. Obtain the applicants's Written Authorization - Prior to ordering any background check, you must obtain the written consent from the individual that a consumer report can be obtained now as well as anytime during the term of employment.

4. Consent form must be FCRA Compliant Make sure the consent/authorization form you are using is in strict compliance with the FCRA rules.

5. Required Certifications - As the "end user" of consumer reports, you must certify the following to the employment background check firm:

  • You will only obtain background checks for permissible purpose (employment).

  • You have made a clear disclosure to and obtained consent from the consumer before ordering a report.

  • You will not use the consumer report in violation of any federal or state equal opportunity laws.

  • If you make a negative employment decision based on information on the report, you will properly follow adverse action procedures, as outlined below.

6. Adverse Action Compliance - If you use adverse information on a report to make a negative employment decision, you must take the following actions before rescinding an offer of employment or terminating an employee. Remember, taking adverse action involves a two-step notification process:

  • In a written, oral, or electronic pre-adverse notice, you must inform the applicant of:

    - The name, address, and telephone number of the background screening company that assembled the report.

    - His/her right to a free file disclosure if a request is made to the screening firm within 60 days.

    - His/her right to contact the screening company directly to dispute inaccurate or incomplete information on the report.

  • - The fact that the background screening firm did not make the adverse decision and cannot explain why the decision was made.

  • Once the pre-adverse notice is sent, allow the consumer a reasonable length of time, normally 5 days, to contact the screening company to dispute the report. After 5 days, if you do not hear from the consumer or the background check provider, proceed with your final employment decision.

  • However, if the consumer disputes information on the report, the screening firm must perform a re-investigation that must be completed within 30 days and at no charge  to the applicant. The employment screening company must update you and the consumer of the re-investigation results.

  • If and when making a final adverse decision, you must send the consumer a final adverse notice.


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    All forms, policies, information and procedures should be reviewed by your legal counsel before being used in any way.

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