Following FCRA Regulations is Smart for Employers

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If you’re conducing employment background checks you should understand how the Fair Credit Reporting Act (FCRA) will affect you. Whether operating a small business or a managing a large enterprise, it is prudent, if not required, that you follow FCRA regulations for employment background screening.

And guess what? Since these rules are designed to protect both the applicant and the employer, following FCRA regulations is just plain smart for business.

FCRA Requirements Apply to All Consumer Reports, Including Employment Background Checks

The Fair Credit Reporting Act comes into play whenever an employer obtains a consumer report – defined as any report supplied by a Consumer Reporting Agency (CRA). Such reports include criminal background checks, employment verifications, DMV records, and many others. All employment background screening companies, including Proforma, are CRAs and are governed strictly.

As an employer, when you use a CRA to provide employment screening services, both you and the CRA have obligations that must be met. While the Act does not require employers to conduct background checks, it becomes a factor if and when a check is performed. And by the way, FCRA requirements apply to all employers, regardless of size.

3-Steps to FCRA Compliance:

FCRA requirements for pre-employment screening are as follows:

  1. The applicant or employee must be made aware that a consumer report will be used for employment purposes and must agree to such use.
  2. The employer must supply pre-adverse action notification — notifying the applicant if the information found in a report may result in a no-hire decision.
  3. The employer must provide adverse action notification — notifying the applicant if the information found in a report does result in a no-hire decision.

A similar course of action is required for screening of current employees.

FCRA Protects the Applicant and the Employer

Simply put, the benefits of following these requirements can be tremendous, even if you conduct background checks in-house. Since FCRA regulations were designed to protect applicant privacy and contribute to fair hiring practices, it makes sense that employers who follow the requirements will be offered greater protection from lawsuits.

While meeting FCRA requirements can seem a daunting task, in reality, once your process is in place these regulations can be easily facilitated. The right background screening provider (CRA) can greatly assist in FCRA compliance by providing necessary consent documents and administering pre-adverse and adverse action notifications.

Have questions about FCRA regulations?

Ask a compliance expert or drop a comment here and we’ll be happy to help. Looking for more information about background screening? Download our free background screening guide.

About Michael Gaul

A security industry professional since 1988, Michael has extensive expertise in the fields of human capital risk management, physical security, and background screening process management. Michael leads Proforma’s sales, marketing, and strategic customer relations efforts.
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