An Introduction to the FCRA and the EEOC

May 28, 2021
Checkr Editor

Your HR team has found the perfect candidate. They’ve extended the offer. Now it’s time for the background check.

It may seem like a relatively straight-forward process—and with the right partner, it should be. However, if you aren’t complying with certain federal, state, or local laws and regulations, you could be putting your company at risk. Understanding how to manage issues that may arise during the background check process in compliance with laws and regulations is important—and will help ensure a smooth background screening process.

What does compliance mean in relation to background checks?

Compliance in this context can involve many laws and regulations and will likely vary based on your specific industry and location. At the federal level, the Fair Credit Reporting Act (FCRA) and guidance from the U.S. Equal Employment Opportunity Commission (EEOC) require that employers follow certain processes related to background checks.

What is the FCRA?

The FCRA is a federal law that governs how companies order and consider information contained in consumer reports (including background or credit checks). Enacted in 1970, the FCRA applies to both employees and independent contractors and is enforced by the Federal Trade Commission (FTC) as well as the Consumer Financial Protection Bureau (CFPB).

The purpose of the FCRA is to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies (CRAs) like Checkr. To that end, it provides safeguards and rights for the consumer who is the subject of a background check.

What is the EEOC?

Founded in 1965, the EEOC enforces and administers civil rights laws against workplace discrimination based on a person’s race, color, religion, sex (including pregnancy, gender identity and sexual orientation), national origin, age, disability or genetic information.

What are some important points to know about complying with the FCRA?

The FCRA requires that employers take certain actions to ensure they are performing compliant background checks. These include:

  • Providing written disclosure(s) so the candidate understands the process
  • Obtaining consent from the candidate before conducting the background check
  • Sharing any information that the candidate requests regarding the background check
  • Requesting the background check only after you’ve received consent
  • Reviewing the results and providing a copy of the background check to the candidate
  • Documenting and following an Adverse Action process

What are “ban-the-box” policies?

36 states, Washington D.C., and over 150 cities and counties have adopted ban-the-box policies, which prohibit employers from asking questions about criminal conviction history on job applications. Initially, the “box” referred to the box on a job application where candidates would indicate whether they had criminal histories; many of these regulations now also govern when employers are allowed to ask about criminal records.

On March 3, 2021, a national “ban-the-box” bill was introduced, which would give states three years to put such policies in place that prohibit private employers from asking about the applicant’s criminal history or risk losing criminal justice funding.  

What are some compliance best practices?

Compliance rules and regulations can seem daunting. Here are some practical ways you can navigate compliance successfully.

  • Understand your industry’s compliance requirements (and stay up-to-date on employment laws). Given how frequently laws change, you may need to update or modify your processes on an ongoing basis. For multi-state/city employers, keeping an eye on local laws is very important. Many employers choose to build a standard policy around the most restrictive markets. Simply starting by understanding the regulations where you are hiring is key.
  • Understand your team’s behavior. Setting up your hiring process is not a ‘set-it-and-forget-it’ task. It needs to be approached as a continuous improvement process. Don’t be afraid to look under the hood and explore the patterns of your hiring behavior. You want to partner with providers who will share data and insights into your process to facilitate thoughtful improvements to your program.
  • Be transparent about your process. There’s a lot of nuance and detail between the FCRA, state consumer reporting laws, employment and privacy laws, ban-the-box policies, etc. But all have a common theme of transparency—specifically to your potential employees. It’s crucial to be clear about why you are running background checks, as well as your process of evaluation.

Take a deeper dive into the employment screening process and compliance by downloading our free resource, The Beginner’s Guide to Background Checks.

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