Posted by Ryan Howard on Wed, Jun 26, 2013
Avoiding a Deny-All Policy
The practice of conducting background checks on prospective employees, contractors and volunteers has become standard operating procedures for many companies across the United States. As transactional volumes and awareness increase, there has been a natural rise in litigation resulting from such requests.
Employers are considered the “End User” of a consumer report, and have certain obligations under the Fair Credit Reporting Act (FCRA) when conducting background checks for new hires or continued employment. There may be additional obligations required by State law, as well as background screening guidance and recommendations set forth by the Equal Employment Opportunity Commission (EEOC) that employers should review.
(EEOC releases guidance on background checks, click here for a sample Decision Matrix template)
Consumer Reporting Agency’s (CRA’s) are those companies who assemble or evaluate consumer information for the purpose of furnishing consumer reports to third parties. Employers often contract with CRA’s to help mitigate their risk of workplace violence, employee theft, and negligent hiring lawsuits. Additionally, CRA’s often consolidate and expedite the background screening process for human resource professionals and hiring managers.
Recent legal actions have included allegations brought forth by the Federal Trade Commission (FTC) and the Equal Employment Opportunity Commission (EEOC) against both Employers and CRA’s. Most notably the lawsuits filed against a BMW manufacturing operation in South Carolina and discount-retailer Dollar General, alleging that their criminal background check policies resulted in employees being fired or being screened out in the hiring process. As an employer and End User of consumer reports, there are a few things you can (and should) do to help protect your business.
The key is to develop a consistent screening policy that will factor the avoidance of blanket “deny all” policies, and ensures decisions are tailored to specific job relatedness criteria.
Although in years past an employer may have had a blanket 'deny-all' policy for felons; this is no longer the case. Hiring managers must factor in the nature of the crime, and weigh it against the job relatedness of the position being applied for. Example: an applicant with a DUI felony conviction applying for a job as an administrative clerk (with no job related driving required) should be given additional consideration. On the contrary, an applicant with the same DUI felony conviction applying for a position as a taxi driver may realistically fall outside the acceptable hiring criteria. A reputable background screening provider should be able to assist with establishing FCRA compliance and best practices. This includes documentation for the following: Proper inclusion and exclusion of applicant Arrests and Conviction records (based on disposition dates and jurisdictional regulations), as well as written Pre-Adverse Action and Adverse Action notification procedures, Dispute resolution procedures, and more.
The goal is to develop a risk mitigating solution that allows your business to remain diligent in the applicant screening and selection process. The following is a list of helpful documents for human resource professionals engaged in the process of conducting background checks:
Instant Documents for Compliant Background Screening:Notice to Users of Consumer Reports, Obligations under the FCRA (Download): This document provides an overview of requirements to remain compliant with the Fair Credit Reporting Act.
Written Consent and Authorization Form (Download): Employers are required to obtain written consent and authorization to conduct a background check.
Pre-Adverse and Adverse Action Notifications (Download): If you are basing a decision to not hire / employ an individual based on information contained in their consumer report, you MUST send a pre-adverse and adverse action notice. This gives the applicant ample time (if they so desire) to dispute the results.
Summary of Your Rights Under the FCRA (Download): When obtaining consent and/or providing the applicant with a copy of their consumer report, this document must be included. Certain states (like California) have their own requirements. Note, the National Association of Professional Background Screeners (NAPBS) publishes a series of educational resources for Employers, available here.
Background Check Decision Matrix (Download): The EEOC has published guidance for employers conducting background checks. As noted earlier, the recommendations include the avoidance of blanket deny-all polices and recommend that employers factor job related decision points when reviewing a screening report.
Ban the Box Law: Some jurisdictions of enacted a “Ban the Box” law that places a limitation on when employers can request background screening reports. In these locations, employers must wait until after the offer for employment has been extended.
As the number of professional background screening companies has grown over the years, it’s important to protect your business by selecting a vendor (CRA) that knows your industry, understands your locations and jurisdictional laws. Although background screening companies have come a long way in complying with the FCRA, they must continue to work with employers to educate and modify industry best practices.
For additional information please feel free to contact us directly, or click below for a quick checklist on employer background screening compliance.