The primary purpose of the Fair Credit Reporting Act (FCRA) is simple. It exists to ensure fairness and accuracy of credit reporting for consumers, including employees. While the underlying purpose is simple, the FCRA clearly outlines rules that companies must follow when conducting background checks. Many companies do not understand the intricacies of the FCRA when it comes to employment screening, and whether done intentionally or by mistake, failure to comply with FCRA guidelines can open a company up to potential legal action.
One of the most important points is that a prospective or current employee must provide authorization for a background check to be conducted. PeopleG2 offers its clients release authorization forms that are specifically written for both criminal background checks and credit reports. It is advisable that these forms are used rather than going through the hassle of creating something new. These forms comply with FCRA guidelines and are provided to give our client’s peace of mind that their background check is legal and compliant with FCRA regulations.
There are two things to keep in mind when dealing with release and authorization forms. First, these forms must be separate from a job application. The FCRA requires that employers present the disclosure to the prospective employee in a document that is separate and contains only the disclosure. The bottom line: If you are unsure about your compliance in this area, utilize a company like PeopleG2 to provide you with the proper forms needed to conduct the background check.
Second, many companies run yearly background checks on their employees; however some do not maintain quality files on employees. It is imperative that HR personnel do not make assumptions about what is contained in a current employees file with regards to a release and authorization. If unsure about compliance in this area, provide the employee with a new release and authorization form.
Finally, there can be additional state or local laws that impact your background check process. It is important to ensure you are aware of those laws and speak with an attorney in your area.