FCRA Compliance – Denying Employment Due to Background Checks

Many companies are using background checks before employment. The practive,while becoming the norm, is not problem free. There are many regulations that a company needs to be in compliance with when utilizing the checks as part of the screening process. The reasoning behind the background check is to attempt to hire employees who are trustworthy, reliable, honest, and qualified. However, there are times when a report comes back and your company determines that the applicant is not a viable employee.

While it is the right of a company to decide not to hire an applicant for a position, when a background check has been used to determine eligibility for employment, the FCRA requires the company to comply with regulations pertaining to credit checks. Failure to comply with the regulations can leave a company open to civil action as well as punitive penalties. Compliance can require very specific steps before adverse action is taken:

  • Applicant must have been giving a copy of the consumer report.
  • The FTC document “A Summary of Your Rights Under the Fair Credit Reporting Act” must have been provided.

After those documents have been provided, the applicant must be given a reasonable amount of time to see the report that contains the information used to determine employment, and correct any inaccuracies by contacting the CRA to dispute the information. While the FCRA does not have a specific amount of time required to wait, opinion letters from the FTC staff has stated that a waiting period of 5 days seems reasonable. After the waiting period it is required that you provide the following documentation:

  • Oral, written or electronic notice of the adverse action to the applicant
  • The name, address, and telephone number of the CRA that furnished the report, along with a statement that the CRA did not take the adverse action is not able to provde the specific reasons for the adverse action.
  • A oral, written, or electronic notice of his/her rights under the FCRA to obtain a free copy of the report from the CRA and their right to dispute the accuracy or completeness of any information included in the report.

While utilizing background screening is an excellent way to promote a safe and profitable workplace for a company, compliance to the regulations is required. The process may lengthen the hiring process, as well as incure additional cost. However, the added security and retention of quality employees can easily outweight the additional steps. Working with a reputable company, such as TruDiligence, can help you with the process. You can contact us for assistance with implementing a background screening program in your hiring process. Our company is dedicated to providing fast, accurate, comprehensive background checks, investigative screenings, and verification services to your company.

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