Using Background Checks to Screen Job Applicants? Legal Landmines Abound!

While it is common for hiring employers to use criminal background checks when reviewing a job candidate’s qualifications, federal law limits the extent to which such materials may be obtained and utilized.

The Fair Credit Reporting Act (“FCRA”) requires employers to make certain disclosures and to secure express authorizations from job applicants before obtaining and using any “consumer report” related to them. (A “consumer report” includes credit reports, criminal background checks and other information related to an applicant.)

The following steps should be utilized by employers before obtaining a consumer report as part of the hiring process:

Provide a certification: The FCRA requires that the employer obtaining a consumer report certify to the reporting agency that it will comply with the FCRA requirements in making use of the report and that it will not use the consumer report in violation of any equal opportunity laws or any other laws.

Verify applicant identity: A hiring employer should require applicants to furnish proper identification to confirm their identities.

Provide required disclosure to applicant and obtain signed authorization: The employer is required to provide a clear and conspicuous disclosure in writing to the applicant in a document that consists solely of the disclosure, stating that a consumer report may be obtained for employment purposes. The disclosure must be in a “stand alone” document – it cannot be made a part of any form including the employment application – and cannot contain any additional information except for the applicant’s authorization. The authorization must be signed by the applicant to confirm that he or she authorizes the employer to obtain the consumer report.

Note too that additional disclosures and notifications are required in the event that an employer decides to take “adverse action” against an employee or prospective employee (such as termination or a demotion) as a result of information obtained in a consumer report.

Employers who do not comply with the FCRA’s requirements face the risk of lawsuits and administrative complaints. Indeed, in recent years, a number of class action lawsuits have resulted in costly settlements and verdicts against large companies.

Please contact Wright Beamer today if you need assistance with FCRA compliance.