Posts Tagged ‘FCRA’

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.

Photo Source: HaxNetwork