FCRA Requirements for Employee Background Checks

The hiring process involves more than simply interviewing applicants. Protect yourself, your business and employees by conducting pre-employment background checks. Using a third party like Universal Background Services can help you stay compliant with FCRA requirements before and after the investigation is completed.

What is the FCRA?

FCRA is an acronym for the Fair Credit Reporting Act, which is the federal law that regulates pre-employment background checks. Background checks are designed to help employers make decisions about hiring new employees as well as keeping, promoting or reassigning existing employees. The results of the investigation are provided in a consumer report and may include information from sources such as credit reports and criminal records.

The most common investigations include credit and criminal background checks. Regardless of the type, Employers must comply with the FCRA requirements or face enforcement from the Federal Trade Commission if they are conducting third-party background checks illegally..

Before the Pre-Employment Background Check

Before requesting a background check from a third party, it’s important to inform the applicant that they are being investigated. This includes a written disclosure clearly stating the investigation is being completed for employment purposes, the nature of the information being gathered and the applicant’s right to request complete disclosure about the investigation. The employer must then certify to the third party agency that all of the steps have been followed and the background check will be used solely for employment purposes.

Employers may ask if the applicant can reasonably perform certain tasks of the job. However, they can't legally ask an applicant for medical information until they provide the applicant with a conditional offer. If the employer chooses not to hire the applicant based on a medical condition, the employer must:

• Prove that the business requires the task is performed; and
• Demonstrate that there was no reasonable accommodation available; or
• Prove that the employee would pose a direct threat to workplace health and safety.

After the Report is Received

There are times when the pre-employment background check results in an employer choosing not to hire the applicant. In these cases, an employer must provide the following:

• Contact information for the third party agency that provided the report.
• A statement that the third-party didn’t make the decision and cannot explain why the decision was made by the employer.
• Notification of the applicant’s rights to obtain a free copy of the report that was provided to the employer as well as the right to dispute any information provided.

Failure on the part of an employer to comply with FCRA requirements can result in enforcement action from the FTC.

If you’re hiring new employees, the team at Universal Background Screening is here to help you understand the steps that need to be taken before and after the background check. This helps ensure that you, your business, and employees are protected. Call us today.