FCRA violations

Avoiding Legal Exposure From Faulty FCRA Disclosures

Criminal background screening is an essential element of the hiring process across virtually every industry. Some states have laws that restrict offenders from certain types of jobs, and most organizations have a duty to safeguard employees or the public from potential harm. Hiring background checks can be powerful and effective tools when businesses use them appropriately.

At both the state and federal levels, governments have implemented restrictions on the use of background checks to preserve fairness in hiring and reduce the effects of discrimination. One important element of those regulations is the "disclosure"—the need to let job applicants know that you intend to run a background search. This required disclosure is an opportunity to obtain written consent from the applicant before proceeding with a background check.

While these disclosures are simple, it is easy for them to result in lawsuits for FCRA violations. While not every disclosure-related FCRA lawsuit has ended in success for the plaintiff, some have resulted in hefty fines in judgment against a business. At the center of these suits is an FCRA provision called the "standalone requirement".

Meeting the Standalone Requirement

The purpose of the FCRA disclosure is to ensure that applicants fully understand that an employer intends to investigate their background and consider the resulting information before the hiring process continues. If a business buries it in fine print or in a location that the average applicant could easily miss, the disclosure could not fulfil its purpose. The FCRA mandates not only the format and content of the disclosure but also its appearance: it must be on its own page with no additional information or other disclosures.

Courts have ruled that some alterations to the disclosure, such as the inclusion of signature lines for written consent, don't violate the requirement. Including the disclosure as one page in a larger packet of job application papers is also legal according to the courts.

It is easy for an employer to make expensive mistakes. In February 2021, a judge approved a six-figure settlement in an FCRA-related class action suit because the page with the disclosure form also contained the company's liability waiver. Businesses relying on third parties to furnish their disclosure forms or using customized applications must carefully mitigate the possibility that these formats will violate the standalone requirement.

What Your Business Can Do Today

Review your job application forms with a focus on the FCRA disclosure page. Ensure that the only text on the page is the disclosure and consent signature lines. Break out other waivers and disclosures, such as state-required information, onto their own pages. Be sure that the language you've used aligns with legislated requirements.

Businesses should view the standalone requirement as one that is essential to follow but easy to meet. View the FCRA page as a unique element and ensure that your paperwork is compliant with the current case law on the subject.

Michael Klazema

About Michael Klazema The author

Michael Klazema is Chief Marketing Technologist at EY-VODW.com and has over two decades of experience in digital consulting, online product management, and technology innovation. He is the lead author and editor for Dallas-based backgroundchecks.com with a focus on human resource and employment screening developments.

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