An ever-increasing number of employers are finding themselves confronting class action lawsuits, claiming that their background check procedures are in violation of the Fair Credit Reporting Act (FCRA); the FCRA is widely viewed as one of the most prominent, and complex, pieces of legislation affecting the hiring process.
That’s one of the reasons a growing number of Human Resource professionals and organizations are also choosing to partner with background screening professionals—such as those at PeopleFacts—to better navigate the complexities presented by the FCRA, and avoid potential related lawsuits.
As a federal law enacted to protect the rights—and privacy–of consumers, the FCRA is a pivotal document pertaining to issues including employee screening and background checks. In broad terms, the FCRA was designed to regulate how (personal and professional) background check information is collected, and used—the regulation also pertains to vital information regarding the use of a consumer’s personal credit history. (To be clear: the FCRA doesn’t apply when an employer conducts an “in-house” background check, although state law may still apply.)
Since its inception in 1970, the FCRA has evolved to become one of the regulatory pillars governing the way employers are allowed to check the backgrounds of their current—or potential—employees.
However, the world in which the FCRA was first introduced has changed dramatically—most notably in terms of technology, and the impact that modern technology has had on an organization–or an individual’s–ability to obtain background information on any American.
Many companies are finding themselves wrestling with the often competing dualities of complying with all the FCRA regulations–while performing the appropriate due diligence required when hiring a new employee. In addition, the world of ‘social media’ has also raised a plethora of new questions about balancing the free speech rights guaranteed by the First Amendment, with both the FCRA regulations and employers’ need to know exactly who they are hiring.
Notably, many of these legal issues are currently working their way through the courts.
There are, of course, a multitude of questions constantly arising regarding a law as important—and complex—as the FCRA, and that is one of the main reasons that so many organizations turn to the screening professionals at PeopleFacts to ensure that they remain fully compliant.
As a member of the National Association of Professional Background Screeners (NAPBS), PeopleFacts has been an industry leader for almost three decades. Through the use of its platform, PeopleFacts screening professionals are able to increase the accuracy level of background reports, via reviews conducted in our United States-based headquarters.
In addition, PeopleFacts’ FCRA certified professionals are well-versed in related compliance demands, and the ever-evolving issues surrounding federal, state and local laws pertaining to background screening.
The reality of 2016 is that federal courts are increasing their scrutiny of employers’ compliance with the FCRA. The number of FCRA-related class action suits has ballooned in recent years, particularly pertaining to employers’ compliance with regulations governing “adverse action” requirements—and actions such as denial of employment based on background information.
For example, earlier this year Home Depot agreed to pay $3 million to settle a class action lawsuit that claimed that the home improvement retailer violated the FCRA. However, that suit was, quite literally, just the tip of the class action ‘iceberg’, as FCRA-related lawsuits continue to pile up in federal courts. (For more information on Fernandez vs. Home Depot USA, please click here.)
And the Home Depot settlement is also a prime example of why a rapidly growing number of companies realize that the concept of “do it yourself” that often works so well for home repairs, is not a good idea when it comes to the complex and increasingly litigious regulatory world of the FCRA.
Top Five Things to Look for with Your Disclosure and Release Form
Be sure to provide all applicants with a disclosure informing them that a consumer report may be obtained for employment purposes.
Employers must obtain the applicant’s written authorization to procure a consumer report.
Make sure the release form does not contain extraneous information.
The disclosure must be separate from the employment application and authorization language.
Information must be clear and conspicuous.
