Compliance

Using Consumer Reports: What Employers Need to Know

http://business.ftc.gov/documents/bus08-using-consumer-reports-what-employers-need-know

The Americans with Disabilities Act (ADA)

https://www.eeoc.gov/eeoc-disability-related-resources
Drivers Privacy Protection Act (DPPA)

http://www.accessreports.com/statutes/DPPA1.htm

Fair Credit Reporting Act (FCRA)

http://www.ftc.gov/os/statutes/fcra.htm

A Summary of Your Rights Under the Fair Credit Reporting Act

http://www.consumer.ftc.gov/articles/pdf-0096-fair-credit-reporting-act.pdf

Notice to Users of Consumer Reports: Obligations of Users Under the FCRA

http://ftc.gov/os/fedreg/2010/august/100816fcraappendixh.pdf

Using Consumer Reports: What Employers Need to Know

http://business.ftc.gov/documents/bus08-using-consumer-reports-what-employers-need-know

Using Consumer Reports: What Landlords Need to Know

https://www.ftc.gov/business-guidance/resources/using-consumer-reports-what-landlords-need-know
Federal Trade Commission (FTC)

http://www.ftc.gov/

Social Security Administration (SSA)

http://www.ssa.gov/

U.S. Equal Employment Opportunity Commission (EEOC)

http://www.eeoc.gov/

Once you are ready to conduct a background and credit check on an applicant or employee, it is important to follow FTC-mandated steps to ensure compliance. Employers should also check relevant state laws, as some states limit background checks to certain job types. 

• Provide written disclosure
• 
Obtain authorization
• 
Provide applicant information
• 
Background check and background report
• 
Report is returned to employer and employee/applicant
• 
Employer review of background check
• 
Notification of adverse action to applicant/employee
• 
Opportunity to dispute information
• 
Re-investigation of disputed items
• 
Review and finalize employment decision

1. Provide written disclosure to applicant/employee.Before performing a background check or submitting personal information to a Credit Reporting Agency (CRA), employers must notify the applicant/employee in writing with an explanation of the process. The applicant/employee must understand that the results of the background check will be used as a basis for hiring, promotion, or retention.

2. Obtain authorization from applicant/employee.After disclosing the intent to perform a background check, employers must obtain written authorization from their applicants/employees that acknowledges that the report may be used for employment decisions. If an employer wants consent to screen employees for the duration of the employment period, this must also be indicated in the authorization.

3. Provide applicant/employee information to Credit Reporting Agency (CRA)Once an employer has obtained written consent, information about the applicant/employee may be provided to the Credit Reporting Agency (CRA) or screening company.Disclaimer: certain state laws may limit the right to request background checks or credit reports for certain positions.

4. Background check and background report.After a third-party agency has received the request for a background check, the agency can begin collecting and preparing a background report. Background reports may include credit history, criminal history, civil judgments, and other personal information on public record.

5. Report is returned to employer and employee/applicant.Once the background report is completed, a copy may be returned to the employer and if requested, to the employee applicant for review.

6. Employer review of background check.An employer may be looking for red flags or issues that could turn up in a background check. Some employers will use credit history to evaluate candidates. If an employer determines that any information from the background report may adversely impact the employment decision, they must follow additional steps to ensure compliance. If no adverse action follows the background check, an employer is successfully in compliance with FCRA.

7. Notification of adverse action to applicant/employee.
   Examples of adverse action steps include: refusal to hire, failure to promote, or termination of an existing employee. If an employer decides to proceed with an adverse action based either in whole, or in part, on a background report, the applicant/employee must be notified in writing. The employee must also be provided with a copy of the background report as well as a copy of “A Summary of Your Rights under the Fair Credit Reporting Act.” (This process is sometimes called “Pre-Adverse Action” or “Preliminary Adverse Action” or “First Notice.”)

8. Opportunity to dispute information.Employers must give employees ample time to review any disputed information and report any issues with the report to the employer. The FCRA recommends a waiting period of five business days before pursuing adverse action.

9. Re-investigation of disputed items.
   If any items on the report are in dispute, a background screening company can re-investigate those items and provide an updated report to both employer and applicant/employee.

10. Review and finalize employment decision.If an employer has followed all steps in conducting a background check, then an adverse action can be completed. A final employment decision can be made and if that decision is adverse, the employer should send a notice of adverse action to the applicant/employee. This process is called “Final Adverse Action.”