Both employers and employees have questions about how background checks work, and how the law regulates them. It’s not always easy to get clear answers because there are so many agencies and stakeholders involved.
A good place to start in understanding background checks is to know how the Federal Trade Commission’s and Consumer Financial Protection Bureau’s enforcement of the Fair Credit Reporting Act (FCRA) works. The FCRA governs the background screening process, including how employers work with professional screening agencies and how job applicants or employees must be informed about the process and the background report. Here are some frequently asked questions:
1. Who performs the background check?
In the vast majority of cases, the background check is done by a “consumer reporting agency” (CRA), which submits a “consumer report” to an employer. CRAs (like Proforma Screening Solutions) specialize in performing background research on job applicants or employees on behalf of the employer. They are required by the FCRA to make reasonable effort to ensure that the employer has a valid right to conduct this research. Employers must certify to CRAs that they will comply with the FCRA.
2. Do job applicants have to approve a background check?
Yes. The employer must have the consumer’s written consent prior to ordering a background check from a CRA.
3. Do job applicants have any rights concerning the background check?
Yes. The FCRA requires that people who consent to a background check be given a document that describes their rights titled “A Summary of Your Rights Under the Fair Credit Reporting Act.” This document states that the job applicants have a right to know if information in the consumer report has been used against them. It explains how a person can get a free copy of their report, dispute the findings of the consumer report, and take action against agencies that violate the FCRA.
4. How are background checks conducted?
CRAs can only research a person and provide a consumer report if there is a “permissible purpose” under the FCRA, including employment screening. CRAs use a variety of sources, including a national network of local court researchers, state and local databases, interviews, and other sources depending on the requirements of the job. They use name, address, date of birth, social security number, and other demographic identifiers to help verify that the information obtained is correct and applicable to the subject of the search.
5. What does a background check report include?
Background check reports can contain information ranging from simple identity verification to comprehensive data on criminal history, employment, education, driving history, and other personal characteristics. You can view a sample background report here.
6. What if a background report has inaccurate information?
There are many reasons a consumer report might include inaccurate information. A subject of background research has the right under FCRA to know all the information in their file and to seek to have it corrected.
7. How can a job applicant or employee contest the report?
The subject of a search has the right to challenge the accuracy or completeness of a report, and the CRA must reinvestigate within 30 days. If information in the file is used in whole or in part to support adverse action, employers must first notify the consumer of this fact and then send a copy of the consumer report and summary of the consumer’s rights to the consumer under FCRA. Here is a link to an infographic that describes the adverse action two-step.
8. How do background screening companies ensure the accuracy of reports?
The existence of the FCRA implies that there is potential for unfairness as a result of inaccuracy. Section 607(b) of the FCRA requires CRAs to “follow reasonable procedures to assure maximum possible accuracy”. Professional CRAs should be using multiple reliable sources in constructing a consumer report.
This short review focuses on FCRA. Other important factors are governed by the EEOC, the CFPB, and the many state and local Ban the Box regulations. Professional CRAs are especially responsible for complying with all these agencies.