Fair Credit Reporting Act (FCRA), which was enacted in 1970, is pretty cut and dry when it comes to the use of adverse action notices. Though there have been revisions along the way, it is surprising when you come across a company that is doing it wrong. Whether they are doing it intentionally or by accident is something for the courts to decide, and landing in court is an increasingly common scenario.
A few stories in the news this week bring the issue of adverse action to the forefront yet again. The most recent example is that of an Atlanta based rent-to-own retailer. Employees and past job applicants are accusing the company of denying new jobs, or firing current employees, based on background or credit checks, and withholding the findings until after they were turned down or let go. Not only are they supposed to provide that information in time for the candidate to correct any potential mistakes, but they are also supposed to make sure the applicant is informed of their rights under the FCRA. The class suing claims the retailer did neither.
A large home improvement retailer is now facing a very similar suit where employees allege they were turned down for employment without being provided copies of the reports that led to the decision. Both of these companies are large, national firms, no doubt with banks of lawyers at their beck and call.
So why is this happening? Is it malpractice? Laziness? As someone from inside the business, those answers seem unlikely. Maybe if we were talking about smaller shops, mom-and-pops who might not think they have the resources to tackle some of these legal issues, then this would seem more likely. But these explanations seem unlikely for groups of this size and stature. When you are a big boy on the national stage, it seems strange not to dot all your i’s and cross all your t’s.
So, here’s a quick refresher for those making the hiring decisions.
Before you get a Consumer Report you must:
- Tell the candidate or employee that you might use information from their report in your hiring decisions. This must be a stand-alone notice! Several huge companies have found themselves in court recently for adding in other language or obscuring the notice with other material.
- Get written permission to conduct the screening in a disclosure and authorization.
Before you take any Adverse Action (ie: reject a job application, terminate and employee or deny a promotion) you must conduct Pre-Adverse Action:
- Inform the applicant or employee that information was recently found that may be used to adversely impact them in an employment decision.
- Give the applicant or employee a copy of the report.
- Give the applicant or employee a summary of their rights under the FCRA.
- Allow time for the person to check to make sure the reports are correct.
After you Take Adverse Action you must:
- Notify the applicant or employee that you are taking this action because of information discovered in their background screen or credit check.
- Provide an Adverse Action Notice that explains their rights and explains how to correct inaccurate information.
- Provide the contact information for the company that conducted the screening so they can address any mistakes.
If you feel overwhelmed by the prospect of jumping through all of these hoops, EBI can help you create a program that makes it easy to navigate the requirements of the FCRA. Consulting your attorney is also a must while setting up or re-vamping your adverse action system. You never have to go it alone.
Employment Background Investigations is a technology driven leader in domestic and global pre-employment background checks, drug testing, occupational healthcare and I-9 compliance. We specialize in development, implementation and management of customized employment screening programs for large and multi-national clients. We are dedicated to information security. EBI is the only NAPBS Accredited background screening company to hold both an ISO 27001-2005 certification for information security and an ISO 9001-2008 certification for Quality Management.
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