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General Disclosures

Disclosures

The federal Fair Credit Reporting Act: Summary of Your Rights Under the FCRA

Our standard fillable FCRA Disclosure & Order Form

For California consumers: Summary of your rights under California law


Additional background screening information and reference materials published by the FTC may be found at: http://business.ftc.gov/privacy-and-security/credit-reporting

If you believe you are the victim of identity theft, applicable information published by the CFPB may be found at: https://www.consumerfinance.gov/ask-cfpb/what-do-i-do-if-i-think-i-have-been-a-victim-of-identity-theft-en-31/, including a copy of the CFPB’s publication “Remedying the Effects of Identity Theft”, which also may be found directly at: https://files.consumerfinance.gov/f/documents/bcfp_consumer-identity-theft-rights-summary_2018-09.docx

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Sometimes Less Is More: Background Check Disclosures Can Go Too Far and Lead to FCRA Violations

Under federal law, an employer that conducts a background check for an applicant or employee must first provide written notice, also known as a disclosure, to that individual – but recent court decisions demonstrate how ill-advised attempts to provide that disclosure can lead to legal exposure. What have been the most common errors made by employers in this regard, and what can you do to avoid these pitfalls?

  • A major retailer was accused of violating the Fair Credit Reporting Act (FCRA) requirement to keep background check disclosures “stand-alone” and free of extraneous information. The company paid a $1.1 million penalty as part of the class-action settlement.

 

  • An employer and its background check company lost a class-action suit for including a liability waiver with their disclosure forms.

 

  • A staffing agency working on behalf of a hospital client was sued for taking adverse action without providing the job applicant with a written description of his FCRA rights.

All employers conducting background checks must satisfy FCRA rules for disclosure and authorization. Before your organization conducts a background check, you need to take the following actions:

1. Put the disclosure in writing. 

Your background check disclosure forms should stand on their own and provide clear explanations of what happens during a background check. They shouldn’t be buried in an employment application or other recruitment documents. The FCRA requires a “stand-alone” written disclosure notifying candidates that a consumer report may be obtained.

2. Get authorization.

Employers are prohibited from conducting a background check without candidate knowledge or authorization. Your written disclosure must come with forms for the candidate to provide written approval to conduct a background check.

3. Affirm your disclosure process.

The screening company conducting background checks on behalf of your organization needs confirmation that you are following applicable laws related to disclosure and authorization. Provide a written confirmation to your screening provider that you have received the candidate’s authorization to conduct a background check for employment purposes. You must also confirm that the background information will not be used in violation of federal or state equal employment laws.

4. Explain the adverse action process. 

Your disclosure process must explain what happens if background check results prompt an adverse employment action. You’ll need to provide candidates with a letter advising that adverse action might be taken if their background check contains information that would negatively impact their employment. Before taking any adverse action, provide a copy of the consumer report to the candidate along with a summary of their rights.

You can build an effective background screening program with disclosure practices that meet applicable federal and state laws. With regular reviews and the guidance of a trusted partner, you can prevent your disclosure forms from easily falling out of date or out of compliance, and protect the organization from lawsuits and costly penalties. While you focus on managing a busy hiring process, let your background screening provider keep an eye on the compliance landscape. Together, you can maintain a healthy background screening and disclosure process.

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