Regardless of whether a facility or organization is mandated to conduct
certain background checks on employees, or is conducting such checks for due
diligence purposes, it is important to understand the basics behind ensuring a
legally compliant background screening program. The following bullet points
will address the basics and some key elements of a complaint background
screening program.
First, if your
organization works with a third-party background screening company and they
provide you with your background check reports, you are covered by the federal
Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) in addition
to analog state consumer protection statutes. As the “end-user” of “consumer
reports” provided by a “consumer reporting agency” you have certain
responsibilities under the FCRA. Failure to follow these responsibilities can
lead to private litigation for violations of the FCRA and state laws,
especially when we consider a very active plaintiff’s bar bringing claims
against primarily end-users of consumer reports (i.e., employers) but also
consumer reporting agencies (i.e., background screening companies).
Second,
employers have an obligation to provide certain disclosures to job applicants
when conducting a background check for employment purposes. A key disclosure is
frequently called the “Disclosure and Authorization” notice. This notice is required
by the FCRA to inform the job applicant that a background check will be
conducted for employment purposes, among other things. Not providing a legally
sufficient or defensible notice advising the job candidate of the fact that a
background check will be conducted in a document that is “clear and
conspicuous” and in a stand-alone format is the subject of significant amount
of litigation around the country.
Third, still
on the topic of the above notice and the content therein. Although the FCRA
does not specify the exact content of the notice, the courts have stated that
including extraneous information in it, such as a release of liability, a
waiver of rights under the FCRA or language about the employment itself can
cause the notice to be legally deficient.
Fourth,
organizations must secure a job candidate’s written authorization for the
background check to be conducted by a background screening vendor.
Fifth,
whenever an organization reviews the background check report for purposes of
determining employment eligibility, the FCRA requires that organization to
follow certain steps if information in the report will be used “in whole or in
part” to take adverse action against the subject of the report. This is called
the “adverse action” process and it is a two-step process.
The first step is triggered when an organization reviews information in the
report and makes the initial determination that the individual may be excluded
from employment based on information in the report. This triggers what is known
as the pre-adverse action step which requires the organization provide the job
applicant with a copy of the report and a federal notice called “A Summary of
Your Rights Under the Fair Credit Reporting Act.” Then, as a general rule, the
organization should wait at least five (5) business days to allow the
individual to review the report and challenge any inaccuracy or incomplete
information in the report with both the organization and the background
screening company. Sometimes, the reports do include inaccuracies and the FCRA
is set up to allow individuals to address such inaccuracies through a consumer
dispute process.
If, after a reasonable period of time (e.g., five business days) the
organization determines it will not hire the individual due to information in
the report, the second step is triggered. This is known as the adverse action
step, and it requires that the job applicant be provided with a letter with
specific content, as per the FCRA.
To be clear, above points are intended to provide a basic or general
overview of what is required when conducting a background check using a
background screening company and the focus is on the FCRA. Drafting or
reviewing of corporate policies and procedures, as well as the forms/notices
legally required is something that should be done with the assistance of legal
counsel. It is also important to note that there are other factors an
organization must consider as part of its background screening program.
Organizations need to be mindful of “Ban the Box” laws in their states and
local jurisdictions and know whether they can “ask the question” on the job
application about criminal history. Also, whenever an employer uses criminal
history information to screen a candidate they must be aware of guidance by the
Equal Employment Opportunity Commission on the use of criminal history
information for employment purposes. (Enforcement Guidance on the Consideration of Arrest and
Conviction Records in Employment Decisions Under Title VII of the Civil Rights
Act of 1964, Number 915.002, April 2012) Finally, they must factor in state
restrictions on the use of credit in the employment context.
To close the loop on the OIG report mentioned in the first paragraph. The
OIG found that, four years into the grant program, the 25 states receiving
grants reported varying levels of program implementation. In the six states
that submitted sufficient data to calculate the percentage of prospective
employees who were disqualified because of a background check, 3% of
prospective employees were disqualified from employment. The OIG recommended
that the Centers for Medicare & Medicaid Services continue to work with
participating states to fully implement their programs and to improve required
reporting.
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