Potential Pitfalls of Conducting Applicant Background Checks


Background checks have become a familiar arrow in the quiver for employers in the applicant selection process. They have taken on an important role in overall hiring schemes designed to help eager employers glean the cream of the crop in a competitive job market. Moreover, background checks are an effective tool for screening candidates to minimize risk of workplace violence and potential tort claims such as negligent hiring or negligent retention. However, as federal and state law continues to evolve, careful thought to the process of conducting background checks and the use of their results in employment decision making is more important than ever.

The Fair Credit Reporting Act (FCRA) applies to employers who obtain consumer reports for employment purposes from a third party service provider in the business of conducting background screening, known as a consumer reporting agency (CRA). This federal law requires a clear written disclosure that the report may be obtained and requires written authorization from the applicant for the disclosure of background information. If the information is used in any adverse employment action, employers must provide written notice before the adverse action is taken, including a copy of the report and a summary of rights under the FCRA to the candidate. In addition, employers must provide another written notice upon taking the adverse employment action which provides contact information for the consumer reporting agency, explains that the agency played no role in the employment decision, gives notice of the right to a free copy of the report within 60 days, as well as the applicant’s right to dispute the report’s accuracy.

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Published In: Consumer Protection Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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