Posts Tagged ‘background check’

Supreme Court and Technical Flaws of Background Checking Paperwork

Thursday, May 19th, 2016

The alarm bells for employers have been sounding for the last few years about getting your federal Fair Credit Reporting Act paperwork in order.  The proliferation of class action lawsuits around Printproper release forms and the pre-adverse and adverse action paperwork has cost companies millions of dollars.  In large part, the class action suits have been driven by a Ninth Circuit Court (the federal court that covers California) ruling that identified that technical flaws in your company’s background checking documents was “injury” enough to have standing.  This change in the barrier to having standing in federal court made the creation of class action lawsuits very easy to file, and to win.

The new six to two ruling sends the matter back to the Ninth Circuit, but essentially states that in many cases the plaintiffs have to show some injury beyond a technical flaw in the company’s process.  Will this ruling abate the rising tide of FCRA driven class action lawsuits?  Only time will tell.

Making critical hiring decisions for your company is a huge responsibility. Not only is it critical to the success of the company, but also the safety of your employees and getting it right isn’t easy. Last year, approximately 90% of businesses in the US did some sort of background check on prospective employees to help protect their companies against the significant liabilities of negligent hiring lawsuits.

Unfortunately, the number of businesses out of compliance with the latest background checking standards grows every year and regrettably, most hiring professionals do not realize it until they are named in ever more frequent class action lawsuits.

Chances are that you are ordering background checks, but are you compliant?

Background checks compiled by third parties, such as CAI’s detective agency*, are covered by the federal Fair Credit Reporting Act (FCRA).  The FCRA covers more than financial records; it also includes reports that research criminal records, employment records, education information, driving records and even something as simple as an address history.  The FCRA was broadened in scope in 1997, and is designed to provide a safeguard for the applicant who has an adverse action taken against them based upon the results reported in the background investigation.  That is, if the applicant is denied an employment opportunity in whole or part by information contained in a background check, he or she has the right to view the information and dispute the record.

How do you comply?

  1. Have a permissible purpose (employment).
  2. Obtain written consent from the applicant.
  3. Run the check through a reputable third party Consumer Reporting Agency (CRA), like CAI.
  4. Look at the results and decide if the applicant fits the needs of your company:
    1. If the record is clean, keep the authorization form in a secure place.
    2. If the applicant is not hired due to something uncovered in the background check, then you should do the following:
      1. Mail a copy of the report, and
      2. a summary of the applicant’s rights under the FCRA, and
      3. a pre-adverse action letter [that includes the third party’s (CRA’s) name and contact info to the applicant].
      4. If your company is in North Carolina, you also want to send a copy of the NC Security Freeze to the applicant.
      5. After a reasonable amount of time (around five business days) you want to mail the declination letter to your applicant. During this time you should hold the position to give the applicant a chance to respond.
      6. After the “reasonable time” you may hire the appropriate applicant, thus filling the position.
      7. Store the rejected applicant’s signed written consent for six years.  SHRM recommends that you store the negative report for two years.

Hiring can be very stressful and CAI knows that it is better to get it right the first time.

Kevin von der Lippe

Kevin W. von der Lippe is a licensed private investigator at CAI and for 19 years has managed our detective agency and background checking business.  He is security minded and proficient with the federal Fair Credit Reporting Act (FCRA) and the enforcement of Title VII of the Civil Rights Act of 1964, as administered by the EEOC as it relates to background checks. Capital Associated Industries Services Corporation is a licensed investigative agency, specializing in corporate pre-employment background screening. Our corporate agency license is BPN 001473P11.

Contact Kevin at 336-899-1150 or kevin.vonderlippe@capital.org. or www.capital.org

Sometimes I feel like I am selling fear…

Thursday, August 27th, 2015

The following post is from CAI’s Kevin von der Lippe. He serves as CAI’s private investigator and leads the company’s Background Checking department.

Kevin von der Lippe, Private Investigator

Kevin von der Lippe, Private Investigator

Often, clients hear me talking about the pitfalls of not staying compliant with the nitpicky rules of the federal Fair Credit Reporting Act (FCRA).  Or, they hear me cautioning against transgression of Title VII of the Civil Rights Act of 1964, and how the onerous Equal Employment Opportunity Commission (EEOC) is in their enforcement.  Sometimes I feel like I am selling fear, but the reality is, the litigation is real, the liability for your company is real, and the long term consequences for non-compliance can be devastating to your company.

The view from today’s perspective is that there is a sea of class action lawsuits over small, technical flaws with the paperwork required under the FCRA.  In particular, the two main points of contention are: proper release from your applicant or employee, and sending out the proper paperwork (or even any paperwork) before you make your adverse employment action based upon the background check.

The problem stems from an infamous $22 million settlement on the East Coast in 2008. This particular case showed that suing companies who fail to comply with the FCRA could be lucrative. In 2009, the Sixth Circuit ruled that a plaintiff did not have to show actual damages because the fact that the company failed to comply with the FCRA was in-of-itself an “injury” to the plaintiff, thus giving him justification in filing his suit. [1]

In February 2014, the U.S. Court of Appeals for the Ninth Circuit (in California) ruled that “a plaintiff can suffer a violation of the statutory right without suffering actual damages.” [2] Contrary to rulings from other circuits, this reignited a firestorm and on April 27, 2015, the argument made its way to the nation’s highest court. While the Supreme Court’s decision has not yet been made, the ruling could change Congress’ role in defining how these cases move forward, and perhaps even reduce the number of class action lawsuits that are based solely on technical flaws.

The good news is, you can reduce your exposure under the FCRA by keeping up with the necessary paperwork.  CAI provides samples of the necessary documents on our website, www.capital.org/vea.  We also provide the necessary FCRA paperwork with every report issued by our background checking department.

If you have questions about our background checking services, or how CAI can help you remain in compliance with the federal laws related to background screening, please do not hesitate to contact Kevin W. von der Lippe at (336) 899-1150 or by e-mail at kevin.vonderlippe@capital.org.

Capital Associated Industries Services Corporation is a licensed investigative agency, specializing in corporate pre-employment background screening. Our corporate agency license is BPN 001473P11.

[1] Beaudry v. TeleCheck Services, Inc., (6th Cir. 2009).

[2] Thomas Robins v. Spokeo, Inc. (9th Cir. 2010)

Choose Wisely to Avoid the Cost of a Bad Hire

Tuesday, June 12th, 2012

There are several costs associated with hiring a new employee. Money is spent hiring a recruiter, advertising the new position, reimbursing travel expenses and training the new staff member. Not only are financial resources used, but employers spend an ample amount of time with job candidates and new hires. Time is spent interviewing, onboarding and educating the new team member. When considering all the effort invested in one employee, uncovering that she’s a bad hire can be devastating.

CareerBuilder’s recent survey on costs related to bad hires indicates that 65 percent of the participating US hiring managers said that their bad hiring decision cost their company $25,000 to $50,000. Financial losses are easy to spot, but bad hires can also lower productivity and impact their coworkers negatively. Although you can’t prevent a bad hire 100 percent of the time, you can take several steps to ensure a candidate is a good fit for your job opening. Use the tips below to avoid a poor hiring decision:

Know the Job

Do you know why you have a vacancy at your company, and why it hasn’t been filled yet? If your opening isn’t new, take some time to thoroughly understand the requirements and skills needed to fill the position. Review what made past employees successful in the position and what made them ultimately leave. If there wasn’t much success, evaluate what you can do to help reduce turnover.

Nail the Interview

Evaluate your company’s role and responsibility during the interview process. Do you have good interviewers that are excellent time keepers and make job candidates feel welcomed? Do you utilize interview questions that will paint a picture of what the candidate did at his previous job? Do you incorporate questions that will give the candidate different scenarios of what he can expect from his new job? Planning for well-thought-out behavioral interview questions is a must.

Check and then Double Check

Before setting a start date for your new employee, make sure all of your company’s pre-requisites for new hires are completed. Perform a background check to verify his employment and criminal history, call his references to confirm his past work performance and experience, and have him complete an assessment to further demonstrate job fit.

Following the three tips above should help you identify high-performing talent and avoid making a costly hiring mistake. CAI offers services to help you increase your chances of selecting a great hire. Contact Molly Hegeman at 919-878-9222 or http://j.mp/cai-a for more information about recruiting and assessments.  Contact Kevin von der Lippe at 336-668-7746 or www.capital.org/vea for questions regarding background checking and reference services.

Photo Source: hawken king