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.
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 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.
 Safeco vs. Burr 551 U.S. 47 (2007)