There are any number of reasons why employers may want to investigate the backgrounds of job applicants and employees. Identifying job candidates who lie on their resumes or job applications is one reason; complying with state or federal laws that require background checks for certain jobs is another.
But conducting accurate and timely background checks can be tricky and time-consuming for many businesses. A consumer reporting agency, or CRA, can perform background checks to help almost any business. Here are four things to know when hiring a consumer reporting agency:
1. The federal FCRA
The federal Fair Credit Reporting Act (FCRA) has a number of requirements for employers who wish to use a CRA to conduct background checks on job applicants or current employees. The report that a CRA provides to the employer is called a “consumer report.” If an employer uses a CRA to perform background checks on job applicants or current employees, it must:
- Clearly tell the individual that the employer is going to conduct a background check with a disclosure made on a separate document (it cannot be part of the employment application)
- Obtain the individual’s signature on a document authorizing the background check
If an employer decides to take an “adverse action” based on the information in the consumer report (such as not hiring an applicant or terminating an employee), the FCRA has other requirements an employer must follow when notifying the individual of its decision.
2. The employer’s ‘adverse action’
Prior to taking the adverse action (sometimes referred to as the pre-adverse action), the employer must provide the applicant or employee with certain documents, including:
1. A copy of the report obtained from the CRA
2. A summary of the individual’s rights under the FCRA. This summary is a standard document created by the Federal Trade Commission.
After giving the applicant or employee these notices, the employer is required to wait for a certain period of time (usually between 5-10 business days) before taking the adverse action.
3. The consumer’s right to dispute
After the adverse action is taken, the employer must provide a number of other information to the applicant or employee, including:
- Notice of the adverse action taken
- The name, address, and toll-free telephone number of the CRA that provided the consumer report
- A statement that the CRA did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken
- Notice of the consumer’s right to obtain a free copy of the consumer report from the CRA within 60 days
- Notice of the consumer’s right to dispute the accuracy or completeness of any information in the consumer report furnished by the CRA
When hiring a consumer reporting agency, employers need to be aware of particular laws regarding the use of such information. For example, although the FCRA allows the reporting of arrest information going back seven years, some states prohibit employers from considering whether a job applicant has ever been arrested (but not convicted) of a crime.
That’s why employers need to make sure they are familiar with the specific laws of their state before making an employment decision based on the information from a background check. If you have any questions about this, you should consult with an employment law attorney in your area.
4. It’s worth the cost
Although instituting a background check can be a big step for an employer, the benefits are almost always worth the time and effort. The cost of hiring a consumer reporting agency is slight compared to the costs associated with hiring an individual who lies on his or her resume or job application and who later goes on to steal from the company, drive a company car while drunk, engage in workplace violence, or worse. A background check can help employers reduce or eliminate such risks.
Background checks can make your hiring easier — and so can Monster
It’s hard to find good talent, but using background checks from a credit reporting agency can narrow the field. A lot more goes into the recruiting and hiring process, which is why we’re here. With expert recruiting information and the latest in job market trends, Monster Hiring Solutions has the resources to help you choose the best job candidates.
Legal Disclaimer: None of the information provided herein constitutes legal advice on behalf of Monster.