10 FCRA Best Practices to Keep You Out of Court

Employers who decide to implement a background screening process for job applicants, or engage the services of a third party to do it for them, will immediately discover an assortment of challenging and involved statutes, laws, and regulations. The Fair Credit Reporting Act (FCRA) is an important part of any background check program, and it’s crucial for you to understand how it applies to your company.

What is the FCRA?

The FCRA is a federal law that governs the collection, assembly, and use of consumer information. It provides the framework for the credit reporting system in the United States, including consumer credit information. FCRA regulates the practices of Consumer Reporting Agencies that collect and compile consumer information into reports for use by credit grantors, insurance companies, employers, landlords, and other entities who make eligibility decisions affecting consumers.

FCRA Regulations

  • FCRA applies to background checks performed by outside companies but not to background checks conducted in-house.
  • In general, FCRA prohibits reporting of criminal arrests after a period of seven years, but criminal convictions (including DUIs) may be reported indefinitely.
  • FCRA reporting restrictions only apply to jobs with a yearly salary of $75,000 or less.
  • Most state FCRAs allow employers to refuse employment to anyone with a conviction record, and many states even allow employers to refuse applicants with an arrest record, mainly due to a lack of regulations in this area.

Does This Affect You?

The FCRA impacts Background Check companies and related Consumer Reporting Agencies (CRAs), Banks / Creditors, Credit Bureaus, and Employers.

The FCRA regulates employers in the following manner:

  • FCRA sets rules for what information employers can gather and also sets rules for how gathered information can be used, i.e. the extent to which employers can use background check results in making hiring, promotion, termination and other decisions.
  • Many states also restrict what criminal background and credit information employers may obtain and / or use in making employment decisions.
  • Employers who utilize CRAs to procure criminal background reports must take certain “pre-procurement” steps.

10 Best Practices

  1. Provide notice to the subject that a criminal background check may be obtained for employment purposes.
  2. Make this notice a stand-alone document.
  3. Obtain authorization from the subject of the criminal background report.
  4. If a criminal background report contains negative information which “in whole or in part” may cause you to take any adverse action, including rejecting that candidate for employment / denying a promotion / terminating a current employee, you must provide a copy of the report to the applicant and the FCRA Summary of Rights.
  5. Give the applicant sufficient time to obtain /dispute/ clarify the background check report before making a final decision.
  6. After the appropriate waiting period has passed, if you decide to take adverse action, provide notice of such adverse action to the subject of the background check. Although notice may be provided orally, the more prudent route is to use written or electronic notification.
  7. Move away from broad across-the-board criminal background exclusions.
  8. Refine general exclusion standards to apply to the actual positions sought.
  9. Use individualized assessments when considering applicants with criminal records.
  10. Consider state law restrictions on obtaining and using criminal background information.

SELECTiON.COM® provides the comprehensive and customizable screening solutions needed to navigate the legal aspects of background screening. We stay up-to-date with all EEOC and FCRA regulations and provide you with all of the forms you need on our proprietary system, Fastrax Select®. Our system allows employers to stay compliant and provides clients with the ability to follow the background check process from start to finish. Our Applicant Entry system will obtain accurate information straight from the applicant, as well as an electronic release form. The one-click FCRA notification system makes the FCRA compliance a breeze.

Contact us today to see how SELECTiON.COM® can take your employment background check process to the next level.

NOTE: The contents of this article are not legal advice for your particular situation. You should neither act nor rely upon anything stated in this article without first consulting your own legal counsel.

Article by Melissa Fleming