Employer Requirements for Background Checks
There are basically three entities involved in the procurement of background checks. They are
1. The consumer – or the subject of the background check
2. The end user – or the employer requesting the background check
3. The Consumer Reporting Agency (CRA) – the company that provides the information on background check
The requirements for the end user are explained in the Act (FCRA), but consist of four basic steps.
1. Disclosure and consent. The disclosure that a consumer report may be obtained for employment purposes. This should be done on a separate document and not included as a part of the employment application. The employee’s or applicant’s written consent must be obtained, and it may be included on the same document as the disclosure.
2. The end user must certify to the CRA that disclosures and consents have been made and obtained from the consumer. Pre-adverse action disclosures will be made if necessary. (See number 3 below.) If requested, further disclosure regarding investigative consumer reports will be provided. The end user will comply with all federal and state Equal Employment Opportunity laws as they pertain to background checks.
3. If the end user contemplates adverse action, either not hiring, not retaining, or not promoting an employee based on information contained in the consumer report, the employer must provide to the applicant a copy of the consumer report provided by the CRA, the FTC’s Summary of Consumer Rights notice, a statement that adverse action is contemplated, and allow a reasonable time for the consumer to submit a dispute to the employer.
4. The Adverse Action Notice to the consumer after adverse action is taken will include the CRA’s name and contact information. A statement will also be included that adverse action (not hiring, retention, promotion) is being taken, that the CRA is not the decision maker and can’t provide a reason for the decision, the consumer has a right to a free copy of the report and that the consumer has the right to dispute the accuracy of the report with the CRA.
It seems odd that the end user should be required to submit both a pre-adverse action and an adverse action notice, but the Act is very clear that both are required. The Act does not define a “reasonable time” to wait after a pre-adverse notice, but many companies specify five days.