Posts Tagged ‘background checking’

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 or

Creating a Better Background Check for Your Business

Thursday, October 15th, 2015
Kevin von der Lippe, Private Investigator

Kevin von der Lippe, Private Investigator

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.

Most companies do some sort of “background check” on their new hires — But most of the time… you get what you pay for.  How can you be sure that you are getting accurate information you actually need to make a good hiring decision?

The Basics

Performing a background check is your opportunity to independently verify the information that your applicant has provided.  Given the importance of the task, the verification process should extend beyond their stated skill set, and include even the most basic information such as the applicant’s name, address history, and vital statistics.  Be aware, product names for these type of searches may vary, but many companies refer to them as “SSN traces, address histories, or name histories.”

With a verified name and address history in hand, you now have the name/names to search for criminal history as well as the jurisdiction(s) to do so. The availability of criminal records varies among states.  To ensure that you are getting the most up-to-date information, CAI recommends that you request criminal records that are pulled directly from official repositories (e.g. courthouses).  Some states, like North Carolina, have excellent statewide indexes administered by the court system.  However, some other states lack the technology, or access to do so.  As a result, many background checking companies sell database products under names like “Nationwide Criminal, National Criminal or Multi-State Criminal records,” but it’s important to know that most of these databases are from a third-party collection of criminal records, not an actual courthouse. While database searches CAN provide a broad net when searching for records, it’s usually at the expense of missing information and being out of date.  As a result, CAI recommends that you reserve these database inquiries as a supplemental search.

How many jurisdictions you search depends upon the sensitivity of the job you are trying to fill.  Most companies look at a seven year address window — as revealed by the SSN trace — to provide an outline of where to search.  Remember, be consistent with the time period you choose to search. Check the applicant’s employment history.  It is very important that you look for gaps in the employment history and you get satisfactory (and confirmed) answers for any idle time.  CAI recommends that you check all former employers within the window you set, and ask specifically about: dates of employment, job title, salary; duties, if the applicant was involved with any violence, and any specifically job related requirements.  As a side note, always look up the phone number for references.  It is common for applicants to provide bogus numbers to ensure they get “good” references.  You should be cautious of toll free number for former employers.


With the basics of identity, references and criminal record behind you, focus on job specific requirements.  You should tailor your background check to fit the needs of the position that you want to fill.  For some jobs, you will want to confirm that the applicant has the necessary education to be successful at the job.  You should check the diploma or degree as well as the schools’ accreditation.  It’s not enough that a school claims to be “accredited” these days, there are several “diploma mills” that create bogus accreditation’s for an organization.  Always check the accreditation against the U.S. Department of Educations approved list at:

Will your applicant drive a company vehicle, or does the job require driving as part of the regular job duties (like driving to the post office)?  If so, it is a great idea to confirm that you applicant is fully licensed to drive, and has a good driving record.  A motor vehicle report will provide at a minimum a three year driving record for your applicant.  In most cases, it will also include tickets received while your applicant was out of his/her home state.

If your applicant is going to handle money, or has access to credit, or sensitive information (e.g. account numbers, SSNs, etc.) then it may be a good idea to check your applicant’s financial credit file.  If your applicant cannot demonstrate that they can manage their own personal finances, what expectation should you have that they can manage your company’s money?


Beyond the standard checks, there are a lot of specialized searches that you may choose to utilize to ensure that you make the best hiring decision.  This is especially true if you are hiring for employees that will be working on government contracts.  It is not uncommon for the contracts to require searches of federal criminal record, debarment lists, and the terrorist watch list.  Many schools require sex offender list searches as well.

Although performing a background check is usually one of the final stages in the hiring process when we’re ready to hire someone, it’s a crucial that you get it right… the first time.  Generally speaking, most companies and HR professionals perform background checks, but the majority of them are under a false impression that all background checks are the same – not true.

Remember, it’s not just a background checking service that you’re entrusting this company to perform, it’s also the safety and longevity of your entire company. Don’t just “check-the-box” and go with the lowest cost provider, make sure they’re using reliable and up-to-date databases, checking for any discrepancies and providing you with the individualized feedback you need to make the best possible decision for your company. Resist the temptation to rush through this important step. Turnover is costly and hiring the wrong person could be deadly. After all, most people fail at jobs for reasons other than lack of skill…reasons that could easily be uncovered with a properly administered background check.

Our Background Checking Team will help you uncover everything you need to know about your job applicants and employees. If you would like to talk about your company’s specific needs, please call Kevin W. von der Lippe at (336) 899-1150 or by e-mail at

Follow the DOs and DONTs of Background Checking in 2015

Thursday, January 29th, 2015

The following post is from CAI’s Kevin von der Lippe. He serves as CAI’s private investigator and leads the company’s reference checking department. Kevin has some helpful tips to keep you on the right track in 2015.

Kevin von der Lippe, Private Investigator

Kevin von der Lippe, Private Investigator

With the start of the New Year, most of us are happily looking toward the future and have already began adopting our newly appointed “good habits” for 2015.  So, now that you’re back on path of good intentions, make sure you’re hiring practices are as well! Make sure you’re following the federal Fair Credit Reporting Act (FCRA) when requesting your background checks in 2015 before you’re caught on the wrong end of a class action law suit!

Unfortunately, 2014 was a hard year for some… blindsiding several uninformed businesses with more than a few unwelcomed class action lawsuits for disobeying the FCRA.  Why you ask? Because in 2007 the Supreme Court ruled[1] that if a company displays willful acts of disregard for the FCRA, then such companies may be sued for punitive damages without proving actual damages.

And in 2014, suing is exactly what they did…

November 2014, Publix Super Markets settled their class action lawsuit for $6.8 million.  In October, Dollar General settled their suit for a little over $4 million. And after being sued by a former employee in September, Cannon Solutions America, Inc. settled for an undisclosed amount.

All from technical flaws.

Many of these cases are brought forth over the company either not obtaining proper permission from the applicant or by not providing proper notice to the applicant pending a negative hiring action.  In both cases the law is clear.

You must obtain permission – with very specific wording – on a stand-alone release form before you conduct a background check.  The release form cannot be clouded by having extraneous information, or by asking the applicant to waive his or her rights.

If you receive a background check with negative information, which gives you too much heartburn to move forward with the job offer, you must provide the applicant with a chance to review the report and dispute any inaccuracies before you make your final hiring decision.  How to comply with the process is clearly spelled out in the FCRA.  You must provide your applicant with a copy of the report, a summary of their rights under the FCRA, and a pre-adverse action letter that tells them the contact information for your background checking company.  Some states may require some additional information (NC requires a Security Freeze document).  You should then give your applicant a “reasonable amount of time” to review the report and make a dispute.  We believe that five business days will be sufficient in many cases.  Afterwards you must provide the applicant with a final adverse action letter that states they are no longer a candidate, and again provides the background checking company’s contact information.

For more information, or to see a sample of the FCRA documents, please visit our website, or contact Kevin von der Lippe at (336) 899-1150.

[1] Safeco vs. Burr 551 U.S. 47 (2007)

Background Checks – Three Questions to Consider

Thursday, April 14th, 2011

These days, most employers include background checks as a mandatory part of the hiring process, as they should.  When conducting background checks it is very important that you follow the letter of the law.  Here are three important considerations for your background checking process:

  1. Are you complying with the federal Fair Credit Reporting Act (FCRA)? A lot of companies get derailed on the word “credit” – they feel that since they are not looking at the financial record of their applicant/employee that the FCRA does not apply to them.  In reality, the FCRA actually applies to any sort of background check that is compiled by a third party, such as your background checking company.  It is almost impossible to avoid using a third party in some part of the background check.  Many companies and a lot of universities refer verification inquiries to third party companies that act as the repository, instantly bringing your background check under the purview of the FCRA.
  2. Is your decision point job related? The Equal Employment Opportunity Commission (EEOC) rules are clear—you should only hold items against your applicant that are job related.  If you are unable to show a correlation to the work your applicant needs to do, you are better off not considering the unrelated negative background check results when making your hiring decision.  In fact, the EEOC has said that you must take into accountthe nature and gravity of the offense or offenses for which the applicant was convicted; the time that has passed since the conviction and/or completion of the sentence; and the nature of the job held or sought.
  3. Should you look at financial credit reports? The answer is yes, if it is important to the job requirements of the position for which you are hiring.  Recent actions by legislators and the EEOC should make you take pause before requiring a financial credit report on all applicants.  A good litmus test (unless you are in Hawaii, Oregon, Washington and Illinois) is if the position includes any of the following characteristics:
  1. is a managerial position which involves setting the direction or control of the business;
  2. involves access to customers’, employees’ or the employer’s personal or financial information other than information customarily provided in a retail transaction;
  3. involves a fiduciary responsibility to the employer, including, but not limited to, the authority to issue payments, transfer money or enter into contracts; or
  4. provides an expense account.

CAI works closely with its Background Checking clients to ensure they are fully compliant with local and federal laws.  If you have questions about background checks, please contact Kevin von der Lippe at 919-878-9222 or 336-668-7746.

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