Creating a Compliant Background Screening Program - NFIB

Creating a Compliant Background Screening Program Part I: Disclosure and Authorization Forms By Robert M. Graham, Esq. If your organization conducts background checks on at least some of its applicants, congratulations. You are among the eighty-six percent of organizations that do so according to a 2012 SHRM study. There are many reasons for screening your applicants:     

To ensure a safe work environment for your employees To reduce legal liability for negligent hiring To reduce/prevent theft and other criminal activity To comply with state law; and To assess the overall trustworthiness of the applicant

There are, however, some important concepts that you must understand to have a compliant background screening program. Failing at any one of these concepts can expose your organization to the threat of class action lawsuits arising out of the Fair Credit Reporting Act (FCRA). Fortunately overcoming the challenges is quite simple. This series of articles will address these concepts; clearly define your obligations and how to meet them. The goals of the FCRA are straightforward – protect the privacy of consumer report (background check) information and guarantee that the information supplied by consumer reporting agencies is as accurate as possible. Congress expanded employer responsibilities because of the concern that inaccurate or incomplete consumer reports could cause applicants to be denied jobs unjustly.* Part of those expanded responsibilities includes disclosing to your applicants the fact that you intend to run a background check. The language in §604(b)(2) of the FCRA requires the following of any background check run for employment purposes: (i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and (ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person. 7131 Riverside Parkway Tulsa, Oklahoma 74136 o: 918.779.7000 f: 918.779.6500 trak-1.com

So let’s break this down:

Clear and conspicuous disclosure – Your disclosure language should be easy to understand. It should be written at a reading level of your average applicant – free from complex legalese. It should stand out. To be conspicuous you cannot bury the fact that you will be running a background check in the middle of a stack of paperwork that is likely to be missed by the applicant. In writing – You are required to have a written form. You cannot make your disclosure over the phone or in conversation. Before the report is procured – You must make your disclosure before your obtain the background check. In a document that consists solely of the disclosure - *** Key Provision *** This is where most problems occur. You cannot put ANYTHING other than the disclosure language on this form. No special sections labeled, “For administrative purposes only”; No waiver of rights; No questions about previous arrests or convictions; No other information! Given the litigation around this particular issue we recommend that you do not combine the disclosure and authorization statements even though that appears to be authorized in section ii above. There is statutory liability for violating this provision – it’s nearly automatic. Every person to whom the noncompliant form has been given is a potential class member for a lawsuit. This is not a theoretical threat. These lawsuits are happening. And they are happening to large organizations with legal departments that should know better. Authorized in writing – Your applicant must sign something authorizing the background check. As stated above, the authorization is best kept on a separate form. You CAN include other information on this form but be careful. Many organizations attempt to put broad waivers of rights on these forms. Applicants cannot waive their rights under the FCRA. Be careful when including disclaimers on your authorization forms. State Law Considerations

7131 Riverside Parkway Tulsa, Oklahoma 74136 o: 918.779.7000 f: 918.779.6500 trak-1.com

So far we’ve reviewed the language from the FCRA that comes from the federal level. There are state law considerations as well. At least three states have laws that impact the disclosure and/or authorization forms. California, Minnesota and Oklahoma each require that a checkbox appear on the form to allow the applicant to request a copy of the background check report that the employer obtains. In California the employer must provide the copy of the report within three business days from when it receives the report. In the other states the consumer reporting agency is responsible for sending the copy of the report to the applicant.

Review Your Forms Let’s face it – paperwork is boring. And Human Resources paperwork is daunting. Most hiring managers don’t think twice about the forms they print. “Legal takes care of making the forms.” “This is the form we have always used since I’ve been here.” “This looks like every other form I’ve seen.” These are all too familiar comments and they all lead to non-compliant forms. If you have a background screening program in place take this moment to review your forms. If they don’t follow the rules outlined above stop using them immediately. Every time a non-compliant form is presented you are expanding the class of individuals who can sue you under the FCRA. The damages under the statute are between $100 and $1000 per violation. How many applicants have you had this year? How many applicants have you had while the form was non-compliant? Your organization may be doing everything else regarding background screening in the best way possible. Don’t let a piece of paper expose your organization to lawsuits.

* Note: According to the Federal Trade Commission, one of the organizations responsible for enforcing the FCRA - Background screening conducted on volunteers is subject to the same rules as employment screening. This will be covered in greater detail in another article in this series.

7131 Riverside Parkway Tulsa, Oklahoma 74136 o: 918.779.7000 f: 918.779.6500 trak-1.com

Robert “Matt” Graham is VP of Operations for TRAK-1 Technology, a premier and nationally accredited background screening company that helps companies attract quality candidates, reduce bad hires, enhance workplace safety and secure quality talent. Mr. Graham currently co-chairs the Information Securities sub-committee of the Best Practices Committee for the National Association of Professional Background Screening Association, and is Advanced FCRA-certified. TRAK-1 delivers customized background screening solutions via their proprietary platforms to over 10,000 US companies since 1996. To learn more about TRAK-1, visit www.trak-1.com/nfib , or toll-free 800-600-8999.