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on February 10, 2019 Employment Background Screening FCRA Compliance Hiring and Recruiting

Your New Hire Failed their Background Check. Now What?

When New Hire Fails a Background Check 
As hiring managers know, searching for the perfect candidate for a job is quite the task, especially in a tight job market. Sorting through endless resumes, making calls and setting up interviews can be time-consuming and mind-numbing. When you land upon the perfect future employee on paper and their interviews are flawless, it feels like finding the proverbial needle in the haystack.

What do you do when your new hire fails their background check? 

Do you retract the job offer?

The answer is: It depends. Let's review the steps required to make the decision.

Step 1: Confirmation

Before you go back to the drawing board (or job board as the case may be), verify that the background check records actually belong to your candidate. Inaccurate data entry or database inconsistencies can easily happen during the application process. If a candidate's handwriting is illegible, there's a chance something was mistyped. Internet database records can easily be outdated or incomplete. Make sure your background screening company performs a quality inspection of the record to ensure its accuracy. 

Step 2: Review your policy

A background check policy and a decision matrix are both helpful for consistent hiring practices. The background check policy will provide general direction for screening when hiring for certain positions within your organization. A decision matrix is a reference tool to review when a background screening reveals a criminal record. Both the decision matrix and the background check policy should be reviewed and updated regularly according to experience and current regulations. When your candidate fails the background check, refer to each of these to see if the negative item is within your hiring criteria.

Step 3: Pre-Adverse Action

Before making the decision to retract a job offer, the job candidate must be given an opportunity to explain and / or dispute the accuracy of the background check. The Fair Credit Reporting Act specifies that candidate must be notified with a Pre-Adverse Action notice. The notice informs the individual the job offer may be rescinded based on the information found in their background report. They should also receive a copy of their background report, a copy of their rights under the FCRA and a reasonable period of time to dispute the results. 

Step 4: Decision 

After the candidate receives their pre-adverse action notice, the employer must allow a reasonable amount of time for them to review the results of their background check. If your new hire is able to properly explain and/or dispute the results, and their record is updated and removed, they are approved and can move forward in the hiring process. If they cannot explain, or do not dispute the results, the next step is to send an Adverse Action notice. 

Step 5: Adverse Action/Job Offer Retraction

Adverse action may be taken only after following the required pre-adverse action process in step 3. The adverse action notice must be in writing and state that the job offer is retracted due to failing the background check and that the results were not disputed. The candidate must also be provided with a copy of the report and the background check company used to run the report.

See Also: Adverse Action Notice: Common Compliance Questions

Making the decision to hire or not hire should be a well-considered, documented, multi-step process to ensure the candidate's rights are protected.

With FCRA claims on the rise and more companies subjected to legislation for not following correct hiring procedures, it is imperative that all organizations, big or small, create a process that is reviewed regularly. 

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Author's Note

The content in this blog is designed to deliver an educational overview of the pre-employment screening process. Please note that VeriFirst is unable to provide advice to job applicants regarding employment screening outcomes. If you are a job seeker (not an employer), please refer to A Summary of your Rights under the Fair Credit Reporting Act.

Note: This post was originally published in 2015 and has been updated.

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Ryan Howard

Vice President, Business Development at VeriFirst, a BYL Company

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