Your Compliance Green Light

RSS header - this is hidden

Is your Business in Compliance with the FCRA?

Posted by Ryan Howard on Thu, Aug 09, 2012

FCRA Compliance BookDid you know that more than half of job seekers make false statements on their resumes? Or that many rental delinquencies are caused by imprudent tenant screening? One wrong hiring decision or one tenant screening blunder could cost your company thousands of dollars.

If you’re an employer searching for prospective employees or a landlord looking for potential tenants, background screening is a vital tool to ensure the protection of your business. But background screening is not simply checking someone’s background on the web, and moving on. FCRA compliance must be ensured to avoid legal and liability issues for your company. 

Employers and FCRA Compliance

Pre-employment screening is a vital tool to selecting the right candidate for the job, saving time and money associated with turnover costs and avoiding negligent hiring claims for your company. Below are the basic requirements and procedures to follow to guarantee FCRA compliance. For a more detailed check list, download a free copy of Background Screening and Employer Compliance

1. Disclosure to the Applicant or Employee

Disclosure is the act of informing the applicant or employee in writing that a background check will be conducted on him as part of the hiring or promotion process. The disclosure must be a standalone document, consisting solely of the background screening disclosure and authorization.

2. Written Authorization

If written authorization (signature) is not included in the disclosure document, the employer must obtain a signed authorization from the applicant or employee for the background report. The employer must retain a copy of this authorization. While the Federal Trade Commission (FTC) does not currently require that a copy be given to the background screening company, the latter may request the same when their information sources so require.

3. “A Summary of your Rights under the Fair Credit Reporting Act” document  

This document serves as a protection of the applicant or employee’s rights in the event he may want to dispute erroneous or inaccurate information contained in the background report. Although this document will be provided to the applicant if he requests a copy of his consumer report from the background screening company, it is recommended a copy also be given at the time of consent. 

4. Background Screening

The employer requests a contracted background screening company to proceed with the background check. After the check, the screening company submits the background report to the employer and may provide a copy to the applicant or employee if requested.

5.  Employer Review

If the employer finds no adverse findings in the report after review, he proceeds with the next steps of the employment process.

6. Adverse Action Procedures

If the employer is considering an adverse employment decision based on the report, he notifies the applicant or employee and provides a copy of the background report, including his Summary of Rights under the FCRA. This is sometimes called the preliminary adverse action or first notice. The applicant or employee is then given reasonable time to dispute the report. If warranted, a re-investigation may be conducted and an updated report submitted for the employer’s review. If the employer’s final decision is adverse, the applicant or employee is notified in writing. This is called the final adverse action or second or final notice.

Landlords and FCRA Compliance

Just like employers, landlords need background checks on their prospective tenants to protect their businesses and should ensure FCRA compliance. The requirements and procedures are pretty much the same as those of pre-employment background screening. The difference lies in the type of information needed. Landlords are more interested in the financial background and rental history of tenants while employers need job related information. The Dodd Frank Credit Score Disclose Act is an additional factor for landlords when utilizing certain credit scoring models (click for more information about Dodd Frank Credit Score Disclosure).

Conclusion: 

Negligent hiring or careless tenant screening can be costly and could destroy the business you’ve worked hard to build. Trust VeriFirst and contact us at verifirst.com to not only check but double check information that will help you make informed decisions and ensure FCRA compliance.

 

VeriFirst Background Screening, LLC makes no EXPRESS NOR IMPLIED warranty that this BLOG is appropriate for your particular needs.  PLEASE SEEK THE ADVICE OF LEGAL COUNSEL REGARDING YOUR DUTIES AND OBLIGATIONS UNDER THE FAIR CREDIT REPORTING ACT AND OTHER FEDERAL AND/OR STATE LAWS.

Topics: Tenant Background Screening, Employment Background Screening, FCRA Compliance