The Basics of Pre-Employment Background Check Disclosures and Authorizations

September 15, 2021
Checkr Editor

Editor’s note: Nothing in Checkr’s Blog should be construed as legal advice, guidance, or counsel. Companies should consult their own legal counsel about their compliance responsibilities under the FCRA and applicable state and local laws. Checkr expressly disclaims any warranties or responsibility or damages associated with or arising out of information provided.

It’s not easy to hire talent in today’s tight labor market, so when you do find a great candidate, you want to move as quickly as possible to get them onboard. Yet if you move too fast—and skip over crucial steps related to the background check—you could risk running into legal issues.

Why? Because of the Fair Credit Reporting Act (FCRA), which gives job applicants protections under the law around what information can be collected and reported on during a check. This impacts companies of all sizes, but for businesses who hire a large volume of workers, violation of FCRA requirements could translate to millions of dollars lost.

The easy solution is to simply follow the rules. The problem is, the rules can feel confusing. So, we’re here to help navigate the murky waters of employment screening compliance by sharing three questions to ask yourself before starting a background check.

1. When can we initiate the background check process?

You’ve likely heard about the “Ban the Box” campaign, but may not realize its true (and complicated) impact on the hiring process. Ban the box laws essentially remove conviction and arrest history questions from job applications and dictate when you can request a background check, in order for candidates with criminal histories to get a fair chance at employment.

As of July 2019, 35 states, the District of Columbia and over 150 cities and counties have adopted a ban the box or fair-chance policy. Policies can vary widely based on a variety of factors, so it’s important that you determine the specific laws that apply to the location for which you’re hiring prior to initiating your background check.

2. How should we begin the background check process?

Once you’ve clarified which ban the box laws pertain to your organization, the next step is to understand what you’re accountable for throughout the process and what disclosures you’ll need to provide to potential employees.

The FCRA places responsibilities on the end user (employers) of consumer reports such as background checks. As the employer, you have the responsibility of what’s called “Permissible Purpose,” meaning you’re obtaining consumer reports for permissible purposes under the FCRA and you won’t misuse the information in any way.

The importance of a standalone disclosure

The FCRA also requires that employers obtaining background checks from job applicants must disclose this process “in a document that consists solely of the disclosure.”

Simply put, this means the disclosure document is intended for one purpose only: To make it transparent to potential employees or current hires that you are running a background check on them. This likely applies to both full-time employees or contractors. To reduce your risk of legal issues, consider getting rid of any waivers that try to avoid liability, disclaimers or other extraneous elements in the disclosure form.

Getting the appropriate state disclosures

Different states require different disclosures, so based on your location or the locale you’re recruiting candidates from, there may be specific ways in which a disclosure and request for permission needs to be worded or formatted.

According to a recent ruling, federal and state disclosures can no longer be combined. This means that state-specific disclosures may have to be added as an extra step in this process, so you’ll want to adjust your process appropriately.  

3. Have you received proper permission to run the background check?

As mentioned above, the FCRA affords certain rights to the consumer (candidate), while placing certain responsibilities on you—the user of the background check. This includes getting written authorization from the candidate that it’s OK to run the background report.

Many employers don’t realize they need formal permission, or they may not know it likely applies to both full-time employees AND independent contractors. But skipping this step can end up putting your organization at legal risk. This can be mitigated by being transparent with the candidate and providing them with all the information they’ll need to fully understand the process and what is being asked of them.

As part of this, it’s considered a best practice to share a Summary of Rights under the Fair Credit Reporting Act with the candidate. This summary is available from the Consumer Financial Protection Bureau. While providing this outline isn’t required, it’s a smart idea if you want to create an excellent candidate experience. 

A CareerBuilder study found that 38 percent of employers have lost a candidate because they had a negative experience with their background check. So providing a good experience during employment screening—which includes being fully transparent about what the candidate should expect throughout the process—benefits you as the employer, too.  

Don’t sweat the background check

Now that you have a better understanding of the steps you should take prior to running a background check, you can feel confident moving forward with your employment background checks. Not only do these questions ensure you’re informed, you’re also setting the stage for the new hire to have a positive experience as an employee.  

Want to learn more about proactive compliance during a background check? Download the free eBook, Beyond the Basics: Making Background Checks Work For You now. 

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