Consumer Report Background Check Employment

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Consumer Report Background Check Employment

Hundreds of companies provide employment background checks and qualify as consumer reporting agencies Employment reports often include credit checks, criminal background checks, public records - such as bankruptcy filings and other court documents - and information related to your employment history. The FTC first addresses the question, When is an employment background screening company a ‘consumer reporting agency'?” The answer, according to the FTC, is that a business may be a CRA if it provides information about people to employers for use in hiring or other employment decisions,” and specifically provides information to employers bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.” Although somewhat self-evident, this description illustrates that when employers conduct their own background inquiries, they are not consumer reporting agencies and their inquiries are not subject to the FCRA. On May 10, 2016, the Federal Trade Commission (FTC) released a new publication related to background checks and the Fair Credit Reporting Act (FCRA) titled What Employment Background Screening Companies Need to Know About the Fair Credit Reporting Act.1 As the name suggests, the publication surveys the obligations that consumer reporting agencies (background check companies or CRAs) have under the FCRA when compiling employment-purposed consumer reports (background reports). According to the FCRA, employers using consumer reports (employment background checks are seen as consumer reports in the eyes of the law) to screen job must adhere to the following procedures:

Employment background checks will typically look at consumer reports and criminal records when screening prospective employees. Criminal Background Checks when being used for pre-employment or employment screening purposes are considered consumer reports and employers need to get consent from potential candidates before running background checks on them. After the waiting period, the employer is required to provide a post-adverse action notice to the individual, which includes the name and contact information of the consumer reporting agency that provided the background check on which the adverse employment decision was based; a statement advising the individual that the consumer reporting agency did not make the adverse employment decision and therefore cannot provide any reasons why the adverse action was taken; and notification that the applicant or employee is entitled to receive a free copy of the background check or consumer report on which the adverse action was based within a 60-day period.

When you perform a candidate background check as a pre-condition of employment, you are legally obliged to work in accordance with the Fair Credit Reporting Act (FCRA.) The FCRA is a federal law that governs the production and use of consumer reports for employment. In addition to covering credit checks, the FCRA also governs employment background checks for the purposes of "hiring, promotion, retention, or reassignment." To learn more about credit reporting, read our Consumer Guide, Credit Reporting Basics: How Private Is My Credit Report The FCRA does not require employers to conduct employment background checks. The FCRA governs the manner in which employers may conduct background checks (by procuring consumer reports” from consumer reporting agencies) in the hiring process and during employment.

If the background check contains items of information that may cause you to make a hiring decision that will adversely affect your candidate for employment, you must provide the candidate with a letter advising that adverse action might be taken, provided a copy of the background check report, and also provide the FCRA state of consumer's rights document that explains the rights consumers have under federal law. Employers often do background checks on applicants and get consumer reports during their employment. A consumer report is the same as a background check and may verify employment, references, education, professional licenses, criminal history, credit history, and motor vehicle records.

When the job seeker completes the employment application, the applicant should sign a consent form declaring that the potential employer is seeking a consumer credit report as part of a background check. The second question answered by the FTC is, If your employment background screening company is a consumer reporting agency under the FCRA, what does the law require you to do?” The FTC summarizes the FCRA's core requirements for CRAs as follows: The takeaway for our Employer clients is that they must recognize that employment background checks constitute consumer reports” under the FCRA and they must be intimately familiar with the requirements of the FCRA if they are going to obtain such reports.

At a time that you decide that you will definitely take action based on the background check report that will adversely affect your candidate for employment, you provide to the candidate a second letter explaining that you are taking action based on the background check report, include in the letter the name, address and telephone number of the consumer reporting agency that prepared the report, and provide a second copy of the consumers rights under the FCRA.

https://www.uah.edu/images/administrative/legal/pdf_files/New%20Background%20Check%20Policy.pdf