The FCRA and Hiring – What HR Needs to Know to be Compliant
The Fair Credit Reporting Act (FCRA) can be a slippery slope when you’re trying to do your due diligence and insure your hire with a background check. So how do you navigate the process relative to the FCRA without overstepping your bounds from a compliance perspective? Today, we’ll be digging fairly deeply into the FCRA exploring what it is, how it works, and how you can stay out of troubled hiring water.
What is the FCRA?
The Fair Credit Reporting Act (FCRA) can be a slippery slope.
The Fair Credit Reporting Act (FCRA) became official in 1996 and was developed to protect citizens and professionals from unfair or inaccurate credit reporting. This act helped to establish standards that ensure that employers, insurers, and banks follow a strict method for determining someone’s credit worthiness. One of the most important guidelines for HR professionals can be found in Section 613 of the FCRA which states that Consumer Reporting Agencies (CRA’s) are to “maintain strict procedures designed to ensure that whenever public record information which is likely to have an adverse effect on a consumer’s ability to obtain employment is reported, it is complete and up to date.” In other words, if you’re going to be using background checks to aid in hiring decisions, you better choose mediums to provide this information to you that are completely reliable. Another important point to be cognizant of is instant criminal database records are often reported in violation of the FCRA.
What is the employer certification criteria with regards to the FCRA?
- The employer must certify that it has a permissible purpose to obtain consumer reports and will comply with the requirements for disclosure to the consumer (applicant).
- The employer will comply with the FCRA’s requirements before and after taking adverse action against the individual based in whole, or part, on the report.
- The employer will not use the information in violation of any applicable federal or state equal employment opportunity law or regulation.
What are the necessary steps to take before completing your check in accordance with the FCRA?
Prior to obtaining a consumer report or an investigative consumer report, employers must take a couple of steps to ward off any potential FCRA repercussions:
- Disclose to the applicant in a manner that is “clear and conspicuous,” in a separate document that consists “solely” of the disclosure, that a consumer report may be requested for employment purposes.
- Secure the consumer’s written authorization to obtain the consumer report.
What about the FCRA and criminal reporting?
By default, criminal convictions can be reported forever with exception to the following states:
- Massachusetts (limits reporting of Misdemeanors to five years)
- New Hampshire
- New Mexico
- New York
- Washington (limits reporting to 10 years)
Reporting of criminal records is usually determined by:
- Where the applicant currently resides.
- Where the employer located.
Dismissed cases are reported in all states except the following: California, Kentucky, and New York.
What are salary exceptions surrounding the FCRA?
The one employment-related exception to these limitations is granted when the consumer’s annual salary equals, or may reasonably be expected to equal $25,000 or more in some states; $75,000 in others.
Relative to the FCRA what does pre-adverse and action involve?
Prior to taking adverse action based on information in the report, the employer must provide:
- A copy of the report
- The prescribed Statement of Consumer Rights (FCRA Summary of Rights)
After taking adverse action based on information in the report, the employer must provide:
- The name, address, and phone number of the consumer reporting company that supplied the report.
- A statement that the company that supplied the report did not make the decision to take the unfavorable action and can’t give specific reasons for it.
- A notice of the person’s right to dispute the accuracy or completeness of any information the consumer reporting company furnished, and to get an additional free report from the company if the person asks for it within 60 days.
How do you avoid being in violation of the FCRA with regards to hiring?
The most beneficial step you can take in order to ensure your hiring strategy is compliant with the FCRA guidelines is to choose a qualified background check company. Not only will you be selecting a provider that is familiar with and up-to-date on all compliance issues, but you also want a company that is fully integrated with your hiring platforms, so that you can manage your process in one place and keep each step of your hiring process compliant.
Scared of accidentally creating a FCRA hiring mishap? We’ve got you covered! Give us a call to learn how our hiring experts can help you design a compliant hiring plan that suits your company’s individual needs.
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