What do Whole Foods Market Group Inc., Chuck E. Cheese and Home Depot have in common?
Aside from being household names, they have each settled costly lawsuits involving violation of the Fair Credit Reporting Act’s (FCRA) background screening checks.
More companies appear to be settling complaints with candidates or employees versus engaging in court battles. If Whole Foods, for example, fought its case and was found guilty, instead of settling for $803,000, the retailer’s financial penalty would have been at least $20 million, according to Business.com. (Check E. Cheese and Home Depot each settled for $1.75 million.)
What You Need to do to Increase Your Compliance
It pays to be in compliance with the FCRA and a good place to start your efforts is by:
- Reviewing any policies or procedures linked to your background screening program
- Addressing potential deficiencies
- Identify weak spots or vulnerable areas
- Adding more steps in your screening process if needed
This process isn’t as difficult as you might think. Here are 5 practical tips to help move your organization towards increased compliance:
- Give Proper Disclosure: The disclosure must be a written, stand alone document that’s not part of the application or any other document; it must inform the applicant or employee of the intention to conduct a background check, the reason behind it and the type of information that will be collected; and it must include the background check agency’s contact information.
- Get Written Authorization: Applicants or employees must sign a document that indicates their consent to a background check before it is conducted. The authorization needs to contain two simple elements – a statement saying the individual gives his or her consent to the background check and the name and signature of the applicant or employee.
- Send Pre-Adverse Action Notices: These are negative employment decisions resulting from information obtained from a background check. An applicant may not be hired or an employee may be fired based on this information, for example. Under FCRA regulations, employers must send out these notices, informing applicants and employees of the intention to conduct an adverse action and give them a chance to dispute possible inaccuracies in the consumer report. The notice must state what the adverse action is, such as not getting hired; include a copy of the background check; contain contact information for the company that conducted the background check; and include a copy of a document that outlines the applicant’s FCRA rights.
- Offer an Opportunity to Challenge Background Checks: Send employees or applicants a copy of the background check report and follow adverse action procedures. You must also give them a minimum of five working days to challenge the contents of the report, keep the position open and offer them an opportunity to challenges the results. In some cities or states, however, fair chance laws or local ordinances may require more time than five days.
- Send Adverse Action Notifications: These notices must include the reason for the adverse action, contact details for the company that performed the background check and clarification that the screening company did not make the decision to not hire the applicant or fire the employee, for example.
Besides observing these tips, also consider working with a FCRA expert, or a screening partner like PeopleFacts, to make sure you haven’t misinterpreted any regulations or skipped an important compliance step. Otherwise, you might find your company’s name added to the long list of defendants who have settled expensive FCRA background screening cases.