Less is More is the Message from the Federal Trade Commission

The Federal Trade Commission (FTC), along with the Consumer Financial Protection Bureau (CFPB) oversee the Fair Credit Reporting Act (FCRA). The FCRA mandates that employers that order background checks from Consumer Reporting Agencies (CRA’s) must obtain authorization from job applicants for background checks. The documents used for the authorization must be a clear and conspicuous disclosure document.

It has been recommended that the written disclosure must contain two separate documents, one which explains that the employer intends to run a background check and the other one authorizing the background check. These documents can be contained in the same document, but the FTC does tell employers to use clear wording so that the employee understands what is going to happen through the hiring process.  The message: less is more. Here are some examples of language they say should not be in the document.

• Legal jargon
• Adding extra acknowledgements or waivers
• Any certification by the employer that all information in the job application is accurate
• Any wording that purports to require the prospective employee to acknowledge that your hiring decisions are based on legitimate non-discriminatory reasons
• Overly broad authorizations that permit the release of information that the FCRA doesn’t allow to be included in a background screening report – for example, bankruptcies that are more than 10 years old.

The FTC states that by providing some of this extra wording in the document might make it harder for the applicant to understand the purpose, thus would violate the FCRA. The FTC feels that the authorization portion of the background check document should be in plain language.

Less is more…keep it simple.  Limit disclosures to a few sentences and make it easy to understand. Lawyers continue to look for loop holes in these processes, and they are a continuous source of litigation for employers. Forms should be reviewed and updated where necessary to not only ensure compliance, but also to ensure clarity and understanding for the applicant.