Background checks are an important part of the hiring process, as they can help you avoid hiring the wrong individual. Making sure your screening process follows the law is essential to protecting your company against the risk of lawsuits.
A recent article in a local paper described a job applicant who applied for over 500 jobs and was now looking to bring lawsuits against companies that didn’t comply with the specific requirements of the Fair Credit Reporting Act (FCRA). This individual had already received over $200,000 in litigation payouts. In today’s world, protecting your company requires close scrutiny. Now is a good time to ask yourself a few questions:
- When was the last time we reviewed and evaluated our company policy on pre-employment screening?
- Are we checking the appropriate types of pre-employment background information to capture what we need to make a hiring decision?
- If we outsource to a third party, what assurances do we have that they follow FCRA? Do we follow our obligations under FCRA as an organization? Do we know which obligations belong to our third party vendor and which obligations are ours?
The consequences for failing to comply with FCRA can be significant. First is the possibility of a negligent hiring lawsuit. These types of lawsuits are scary. They can ruin businesses and employees’ lives. For example, a timber company was fined $7 million in a wrongful death lawsuit (a family member was killed by the timber company’s truck driver) because the company failed to conduct a basic criminal background search on the truck driver. A background check would have shown a pattern of unsafe driving and previous license revocations. In this case, the jury unanimously agreed that the company did not show due diligence in hiring.
To make matters more complicated, individuals know that the hiring process has many checks and balances. An oversight by an organization or its third party vendor during the background check process can result in liability for damages in the event of a lawsuit.
Companies need to be aware of the detailed requirements of the FCRA:
- Waiver of Liability Form – Unfortunately, the FCRA is not always black and white. It is open to interpretation. The most recent interpretation is that companies are not able to include a waiver of liability in their background check documents, so any existing waivers of liability should be removed from the process.
- Disclosure and Authorization Forms. FCRA states that disclosure and authorization forms must be clear and conspicuous. Forms can’t be buried in an application process. This can cause issues if forms are merged within an Applicant Tracking System, or the information is part of other forms or documents. Before an employer requests a consumer report, it must notify the applicant, in a stand-alone document, that it may use information in her/her consumer report for employment decisions.
MRA members who use our easy online platform for Reference and Background Check Services can rest assured knowing that we partner with an employment law attorney to continuously update our authorization and disclosure forms to reflect the most recent interpretations of the FCRA.
Source: Beth Mathison, Director of Employment Services, MRA - The Management Association