A Note from ClearChecks on HireRight Acquisition & New BackgroundChecks.com
July 17th, 2015
A federal class action lawsuit was filed June 9, 2015, in the California Northern District Court which should serve as a reminder to employers of the importance of complying with the Fair Credit Report Act when conducting background screening for employment purposes. The plaintiff’s attorneys in the case allege that a car rental company willfully violated the Fair Credit Reporting Act (FCRA) in the way it used background checks of job applicants. This case is important because it shows how proactive handling of applicants can violate the FCRA.
Using consumer reports is highly regulated. The FCRA places many requirements on those who furnish consumer reports and on those who use them. Whenever a consumer report is obtained for employment purposes, additional compliance measures are placed on the employer.
 The FCRA also requires that,  (i.e., denying or revoking a job offer) based on a background check’s results,  A minimum of five business days has been established as reasonable for notices delivered by mail. Also, the FCRA requires that,Â
In this case, the plaintiff’s attorneys allege that the employer violated the FCRA by:
Failing to inform applicants in a clear, conspicuous, written document consisting only of the disclosure that it may procure a consumer report for employment purposes;
Failing to obtain written authorization for the procurement of consumer reports; and
Using consumer reports to make adverse employment decisions without first providing the applicant with sufficient and timely notification of its intent to take adverse action, a copy of the report, and a summary of the applicant’s rights under the FCRA.
The alleged facts of the last claim reveal a trap for proactive recruiting departments that value serving their applicants. As with many employers, the employer had allegedly retained the consumer reporting agency to mail a copy of the report to the applicant if the report might be adverse to the applicant.Â
This is a trap for any motivated, applicant-oriented recruiting department that believes in transparency and communication. The presumably well-meaning recruiter allegedly communicated the result of the background check in a manner that indicated finality, where the pre-adverse-action notice that allegedly went in the mail the next day would likely have invited a dispute of any inaccurate or incomplete information.
 The case also highlights the importance of employers working closely with their consumer reporting agency to ensure compliance. Written policies and procedures can be used to show a court that the employer does not willfully violate the FCRA, but rather any alleged violation is out of the ordinary practice.
To address this particular case, an employer would need to adopt a policy ― and train on it ― that recruiters are not to communicate or take action on a background check until at least five business days from the date of the pre-adverse-action notice. Because such a policy is counter-intuitive for a motivated recruiting department, employers should consider disallowing line personnel from having access to reports until at least five business days after a pre-adverse-action notice is sent.
. Please contact client services if you have any questions or suggestions about our services, or for a review of your background screening policies and procedures.
For more details on the FCRA, EEOC Guidance, various state laws and much more, please visit backgroundchecks.com’s compliance resources and compliance updates archives.
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