Unfortunately, the old adage, “There is no such thing as bad publicity” doesn’t always ring true. In today’s tight job market, the slightest hint of an unfair hiring practice will travel fast into the headlines and even faster into the courtroom. The recent could-be class action case against Advance Auto exemplifies what can happen if a company’s background screening processes are believed to be out of compliance.
In the case of Advance Auto, the auto parts giant was accused of the following:
- Failure to provide adequate disclosures
Employers are required to disclose to applicants and employees—in a document that consists solely of the disclosure—that the employer may obtain a consumer report for employment purposes. This disclosure needs to happen prior to obtaining a copy of the consumer report.
- Failure to supply a copy of the report to the applicant or employee before adverse action was taken.
If an employer is making an adverse hiring decision—in other words, if they are choosing NOT to hire, retain, or promote someone on the basis of a background check—the FCRA states that the employer must provide a copy of the report to the individual before a final decision is made. This gives the individual the opportunity to dispute any of the items in the report, in case of error or for reasonable explanation.
As a result of this case and others like it, we think it’s wise for employers to ask the following questions of their own organizations and the background screening company (CRA) they rely upon to conduct the employment screening.
1. Are Your Disclosure Documents Adequate?
Disclosures and authorizations must not be buried in either the online or hard-copy application process. Applicants and employees should be acutely aware that they are consenting to a background check and they should be made aware of their rights under the Fair Credit Reporting Act (FCRA).
Job applications, even for entry level jobs, can be quite extensive. Yet it is important, according to the FTC, that job candidates understand exactly what information will be gathered and used as part of the application process. In a commonly referenced Federal Trade Commission letter, “The disclosure may not be part of an employment application… A disclosure that is combined with many items in an employment application — no matter how “prominently” it appears — is not ‘in a document that consists solely of the disclosure’” as the Federal Credit Reporting Act requires.
Are your disclosure and authorization documents up to date? Are they stand-alone forms within your application and employment paperwork? The answer to both of these questions should be a resounding “yes” in order to comply with the FCRA.
2. Has the Subject of the Background Check Given Proper Consent?
This is tricky in today’s technology-centered world. The safest bet for consent to a background screening is a written signature, but with so many job applications being processed online “wet” signatures are becoming a thing of the past. Using mouse-enabled signature capture technology and similar secure electronic authorization allows businesses to keep up with the latest application procedures online. More importantly, it allows companies to obtain the necessary consent.
As we’ve learned from the pending Advance Auto lawsuit, consent must be evident and given with an appropriate disclosure form. These two documents go hand in hand, and having one without the other can be a costly mistake.
3. Are You Following the “Adverse Action Two-Step”?
Employment screening may reveal unappealing and surprising information about an applicant to an employer. But employers need to be careful about jumping the gun when it comes to denying employment opportunities based on the discovered information. The FRCA clearly states that consumers have the right to know what is in their file.
When a company contemplates taking adverse action against an employee or applicant based on information found in a background check, the subject of the check has a right to a copy of the report. The employee or applicant also has the right to explain or correct any findings within an adequate time frame prior to any adverse action. Employers must give notice each step of the way—before an adverse decision is made and after an adverse decision is made—with time in between for the individual to respond with clarifications, questions, or disputes. This “Adverse Action Two-Step” is a necessary dance in order to limit your liability.
Employers should note that often the above practices are handled by their employment screening company. Regardless, the responsibility lies with the employer. So be sure to question and test the practices of your provider to ensure the proper handling of your employment screening program. Background checks can drive better hiring decisions and reduce liability and risk, but they need to be implemented properly.