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"Employment screening under FCRA(Fair Credit Reporting Act)"

The FCRA (Fair Credit Reporting Act) is an important factor in every employment screening and background check that an employer requests. Failure to comply with the myriad and confusing details of the FCRA can have grievous results. At The Source: Personnel Information, part of our job is to provide you with the necessary knowledge and procedures to avert those problems.

The principal purposes of the FCRA are to protect the consumer from Identity Theft and from harm caused by CRAs (Consumer Reporting Agencies) and the sources that provide data to those agencies. Under the FCRA all Employment screening or background companies are CRAs and therefore are obligated to comply with the FCRA as it pertains to Employment. The steps you must take as an employer to insure compliance with the FCRA are: 1. Fully inform the applicant of the nature and scope of the check being done and that it will be used to make employment decisions. This document needs to be separate from any other-for instance, it can not be a part of the job application. After receiving the disclosure, the applicant has to provide a written release prior to the commencement of the background check. Here is a sample of our Disclosure and Release form.

2. In a circumstance where you believe you may take 'adverse action' (adverse action in this context means refusing employment to or dismissing an applicant) based in whole or in part on a report provided by a CRA you must provide your applicant or employee with:

 

• Notification that a decision is pending based on the report. This is called the Pre-Adverse Action Letter.

  A copy of the report and

  A copy of 'A Summary of Your Rights Under the Fair Credit Reporting Act'. 

All of this information must be given to applicant or employee in a 'reasonable' amount of time prior to actually making the decision to take adverse action. In practice, 7 days has been deemed a 'reasonable' amount of time. The intent is to allow the person to review the report and rectify any incomplete or inaccurate information it may contain prior to the decision being made.

 

3. After the decision has been made to take adverse action, you must provide the following to the applicant or employee:

 

• Notice that the adverse action was taken (here is a sample of the Adverse Action Letter).

• The name, address and phone number of the CRA that compiled the report, along with notification that the CRA did not make the hiring decision and can not provide the specific reasons why the adverse action was taken.

 

Notice that the applicant has the right to obtain another copy of his or her report within 60 days, and that he or she further has the right to dispute any incomplete or inaccurate information furnished by the CRA.

 

Adverse action notification can be done in writing, orally or electronically. We highly recommend providing all such notifications in writing.

 

The Source will provide the forms and expertise you need to be completely sure that you are in compliance with not only the FCRA, but all other applicable laws. Call us today to find out more. For those of you who are interested, here is the complete text of the FCRA.

 

Adverse action notification can be done in writing, orally or electronically. We highly recommend providing all such notifications in writing.

The Source will provide the forms and expertise you need to be completely sure that you are in compliance with not only the FCRA, but all other applicable laws. Call us today to find out more. For those of you who are interested, here is the complete text of the FCRA.