FCRA Infringement – What Employers Need to Know About Adverse Action

Have you ever passed on a candidate because of a low credit score and didn’t tell the person?

Have you ever used a social media screen as a legitimate background check?

Have you ever screened a candidate without their consent?

If you answered yes to any of these questions, you could be in trouble… expensive, lengthy class action lawsuit trouble.

Using background information when vetting applicants is certainly necessary, and yes, it’s also full of potential pitfalls for employers if you don’t know the ins and outs of employment law. There are numerous protections for employees and potential employees at the local, state and most notably, federal levels. You’ve probably heard about the Equal Employment Opportunity Commission (EEOC) and its regulations regarding discriminatory practices, but you may not be as familiar with the Fair Credit Reporting Act (FCRA) and how it serves to protect employees’ background information from being used against them in the hiring process, especially if that information is collected without consent or includes inaccurate data.

If this is your first time hearing about FCRA, we encourage you to read up on these posts:

The FCRA and You: Protecting Your Credit Information

How to Avoid an FCRA Class Action Lawsuit When Hiring

FCRA Infringements – Big Name? You’re Still Not Safe From Lawsuits

There is a strict protocol employers must follow for conducting background checks on candidates. If you’re not familiar with the protocol, it’s in your best interest to partner with an accredited screening agency like Active Screening to help inform your decisions, alert you to risky practices, develop a screening program that works for your company, and to verify the methods you use once the information is in hand.

Two of the biggest FCRA rules that employers repeatedly fail to comply with are Authorization and Adverse Action. Violations of these routinely get even the most seasoned and robust American companies into trouble with the Federal Trade Commission (FTC), the government agency responsible for overseeing the proper use of FCRA.

Let’s tackle Authorization first. You MUST get an applicants’ consent before conducting a background check. Running a ‘social media background check,’ doesn’t count and can land you in a whole heap of trouble for other reasons, too. But let’s define consent:

  • It’s written
  • It’s asked for on a form separate from any other forms related to the candidate’s application for the job
  • It’s required if you will hire an outside agency (like Active Screening) to check out a candidate
  • Consent often includes the right to inquire about a candidate’s credit report (but this should be specifically stated)
  • There can be no waivers, additional wording, or other unneccessary information on the form that can be confusing to applicants
  • It’s required to obtain extra information like school transcripts or military service records
  • An applicant does NOT have to consent to a background check. You are entitled to take them out of consideration if they do not consent.

The other area employers struggle with is called Adverse Action. This is, essentially, when an employer decides not to hire an applicant based on the information in the background check. But there are some steps that employers must take to comply with FCRA and stay in the FTC’s good graces. Before you tell the candidate you’re not hiring them based on information collected in the background check (in itself, called Adverse Action), you must give the applicant:

Once this pre-adverse action notice is completed, the candidate can review the information and explain or ask for a correction of any negative information. If this doesn’t happen within a reasonable amount of time, you can move forward with your Adverse Action notification:

  • You must tell the applicant in person, in writing, or electronically that he was rejected because of information in the report
  • Include the name, address and phone number of the screening agency
  • Inform the applicant that the screening agency didn’t make the hiring decision and doesn’t know why you weren’t hired
  • Ensure the applicant knows that she can dispute the information in the report, ask for a correction and request a free report from the same agency within 60 days.

Still have more questions? Email us here.

This entry was posted in Applicant-Entry Solutions, Background Screening, Criminal Records, Driver’s Records, General, Human Resources, Identity & Credit, Industry Solutions, References & Credentialing, Tenant Screening and tagged , , , , , , , , , , , , , , , , by Patricia Carlson. Bookmark the permalink.

Patricia Carlson is a content writer who specializes in B2C and B2B inbound marketing. She blogs regularly for clients about the background screening and finance industries, and generates newsletters, white papers and email campaigns for a variety of businesses. Patricia also produces a heavy rotation of editorial material for home design, law enforcement, and family magazines. She’s been writing professionally for more than a dozen years, and for Active Screening for more than two of those. Check out LinkedIn for a roster of Patricia’s clients and links to published works. When she’s not interviewing sources or researching trends, she’s living a fast-paced Florida life questioning the antics of her two young children, partner and mischievous cat. Patricia loves to talk tennis and TV on Twitter – give her a shout @pattycfreelance.

 
        
Active ScreeningBarbara S.
Healthcare Industry

"Here at Holland Hospital, we have been extremely pleased with Active Screening. The report results come back quickly, usually within 24 hours or less.  The staff at Active Screening is easy accessible, knowledgeable and responds to our questions promptly."

Active ScreeningLynn C. Staffing Industry

"Benton Mobley has been and remains my Main point of contact at Active Screening from the beginning; so aside from the comfort of dealing with the same person all these years, there is the most important fact of all;  customer satisfaction. Benton knows the business like the back of his hand; and that is what we need in our fast paced industry of staffing. He is the all-time BEST!  MY employer, Leslie, believes in the notion that great service deserves to be rewarded, so we are here for the duration.We get immediate and personalized attention for any and all concerns we need addressed, and in the staffing industry, this is vital."

Active ScreeningCayce R. Education Industry

"My experience working with Active Screening for our background check process has been very positive.  The reports are almost always completed in a very timely fashion. The information reported appears to be very thorough and accurate.  On the rare occasions that we have questions or problems, the customer service team is always very quick to respond and resolve the issue.  Overall, I am very pleased with the service I receive from Active Screening."

Active ScreeningCraig H. Staffing Industry

"Your customer service is excellent.  The turn around time on background checks is quite fast.  Excellent work.  I haven't had a single problem."

Active ScreeningJackie C. Education Industry

"I wanted to thank you and your staff for being so patient and working so diligently with the Human Resources staff during our recent endeavor to process all of our work study students through background screenings.  We have never had to process so many requests within such a short period of time before, but thanks to you and your staff we made it. Again thank you, we made a good choice in selecting Active Screening."

Active ScreeningLindsey W.  Financial Industry

"I wanted to share my appreciation for your wonderful service...switching background screening companies could have been a stressful task, but your company made the transition seamless. Your website was extremely easy to navigate and the turn around time has been great. I appreciate when information is missing or entered incorrectly during ordering, your company notifies me right away to ensure that my error does not hold the reports results, causing us a delay in hiring an individual...Active Screening has been great to us and I would definitely refer them to others."

Active ScreeningTerry S. Property Management

"Working with Active Screening over the last year and half has been a wonderful experience. They deliver fast and informative results at the best price. Their level of professionalism and the speed they respond to our issues is a benefit that any company can value from. I would highly recommend using Active Screening and their amazing team."

Active ScreeningYulesis D.  Staffing Industry

“Interactive Response Technologies (IRT) has more than 2,000 employees at multiple locations across the United States. IRT has been using Active Screening to conduct criminal background checks since 2006. During this time, Active Screening has consistently returned accurate reports, usually with less than 48 hours turnaround. If there are any problems or inconsistencies with the reports, their staff has called to notify us so that we can attempt to rectify the situation. The staff at Active Screening is always courteous and congenial over the phone. In our opinion, Active Screening is outstanding.”

Active ScreeningAndy N. Software Provider

 "Active Screening has helped us screen our applicants in record time for more than two years.... we are very impressed with the professionalism and speed with which their service team responds to our questions. They understand our needs and are a pleasure to work with. I highly recommend them."

Active ScreeningCassie J. Staffing Industry

"The Active Screening team is very informative; they provided a complete consultation on all the services, so I understood what I needed, and saved me hours and hours of my time learning the various services. Their reputation, as being on the cutting edge of employment screening best practices, certainly held true in this instance. The expertise they brought to the table was invaluable to our understanding of our applicants backgrounds. I highly recommend Active Screening to anyone with the task of screening large numbers of applicants and needing reliable customer support."

Active Screening

With over 20 years of law enforcement experience I can attest to the fact that the strongest predictor of future criminal behavior is a person’s criminal history. As the manager of campus safety at my church, I depend on Active Screening to provide a thorough assessment of every criminal history background check we request. For more than 3 years, Active Screening has been faithful to this task with timely, accurate and reliable service.

Active Screening

We have benefited from knowing that we are not exposing the communities we work with or ourselves to unnecessary risk. We continue to have a perfect record in that we have never had a serious incident with a trip participant causing harm or acting inappropriately with any community member or fellow team member- thank goodness!

Active Screening

I would highly recommend any association or organization who conducts background checks to use Active Screening. In addition to my involvement with WAHA, I am an officer in a corporation with over 500 employees who provide treatment, mental health, and correctional services for children and adolescents. Our company is mandated by law to do comprehensive background searches and I can say with the utmost sincerity that Active Screening product rivals that of any government or other private sector process.

Active Screening

We have used Active Screening and their solution VERITY to screen all our coaches and volunteers working with youth. The online system gives us an easy and cost-effective solution to collecting forms and payments from our applicants...and we simply login to view the results of who passed or failed. It's so easy....thank you Active Screening.