Fred Amicucci/FCRA Advanced Certified
VP of Business Development at DataScreening
Simple mistakes in the way staffing companies do their background checks often lead to lawsuits. Many times, it’s not “their fault,” but rather a misunderstanding of the laws due to accepted behavior over time. Education is key, and working with the proper background screening vendors is even more indispensable when knowing how to stay in compliance.
Relying on “Database” Checks, Types of Criminal Searches
The “wrong” types of searches ran in a background check can lead to litigation. It sounds crazy, but it’s true. Time and cost are often associated with determining which background check company will be used with staffing companies. It makes sense, how quickly they can get the applicant on-boarded will often be the factor if they get the business or not. And the cost, that comes right off their bottom line. But quick and cheap is not always the best. You may pay the price later.
These cases are often associated when an “Instant Check Database” background check company is used as the primary source of the background check report. It’s quick and it’s cheap. The problem is that Criminal Database Checks often miss 40% of actual criminal records. The reason?
Because the data is not from the original source, which are the courthouses. Data is not updated on a timely basis in most criminal databases. People commonly assume criminal data is “automatically” updated in criminal databases. It’s not.
It’s like checking a store’s website to see their inventory for a product you want, only to get there in person for them to tell you the website was incorrect. The physical place is the original source, just like the courthouses are for criminal records. Criminal Database Checks should be used as a supplemental search to a criminal courthouse search, like the County Criminal Search.
The staffing industry is seeing more background check-related settlements for missed records that come up later when their clients do the checks themselves. Agencies must keep certain factors in mind to avoid getting sued. Even more of an issue is that it’s usually not just one incident. Since it’s embedded into your process, it can turn into a class action lawsuit.
The use of background checks can be a potential legal pitfall for staffing companies that can bring about expensive financial settlements and irreparable damage to your client’s brand. Staffing companies must take every measure to avoid running into these mistakes.
Improper Compliance
Improperly conducting background checks can lead to a costly lawsuit. It’s not just the type of background that can get you into trouble, but the way it is performed. Agencies must ensure that whatever background checks are used, they are carried out according to the law. Agencies must comply with the relevant legislation.
The FCRA, Fair Credit Reporting Act, which governs how the process for background checks should be used when making hiring decisions, has strict detailed laws and steps to be in compliance. Below are some basic FCRA regulations,
- Know when you can actually mention that you will be doing a background check. Each state has different laws. Timing is extremely important. Details below.
Get written consent from the applicant before ordering a background check. Must contain the FCRA Summary of Right, authorization, and the proper disclosures, often state specific
When denying employment based on the background check report, a Pre-Adverse Action must be sent to the applicant, including a copy of the background check
Alloy ample time for the applicant to dispute the results or to provide the employer with an explanation (5 business days is considered acceptable). Send the applicant an Adverse Action Notification once a decision has been made not to hire
Operating in Different States
Note that these conditions are not just subject to the FCRA and federal laws, but each state and even many cities have their own specific laws. There is even detailed language that must be included in these forms along with how the forms are presented.
A common issue with staffing agencies is including the language in their standard application. The law states it must be presented as a “stand-alone document.” Some staffing agencies have even been sued after using the proper language but simply not providing the forms as standalone documents.
In addition, many states have a specific process over and above the FCRA. Two states that immediately stand out are New York and California. In New York city, an offer of employment must be made before even mentioning a background check.
And when you do the background check, it must be bi-furcated, meaning the criminal portion must be done last, only after everything else like Employment and Education Verifications have been completed.
Even the authorization forms and disclosures must be customized to fit the searches, criminal vs. all other searches. For example, the first set of authorization forms and disclosures cannot mention anything about a criminal check. Only after the non-criminal checks have been completed can you then send the “criminal” authorizations and disclosures.
Pre-Adverse and Adverse Action Notices
Pre-Adverse Action Notices also have their own minute details when it comes to some states and cities. Some require an additional document specifying the applicant’s FCRA rights, including the Federal Trade Commission (FTC). Many states and cities (again, like New York) also have their own process for Pre-Adverse Action and Adverse Action that must be followed in addition to the FCRA (Fair Credit Reporting Act) Pre-Adverse and Adverse Action process.
There have been lawsuits based on the fact that these documents were sent with errors or not even sent at all, simple because the staffing company was not aware of the laws in that particular state.
Check your Background Check Company Vendor
Most of the legal steps in doing employment background checks is the responsibility of the employer that is doing the hiring. The authorizations, the different state disclosures, and the Adverse Action process are steps that the employer must take to be in compliance. Although, most background check companies will offer it as an added value service.
Many staffing agencies and companies in general are often under the impression that it’s the background check company’s responsibility, when it is not. That’s why it’s extremely important to know if your screening vendor knows the FCRA laws and is following the proper legal steps.
One way to “check your background check company” is to make sure that they are Accredited by the PBSA, Professional Background Screening Association. The FTC and the FCRA are the governing laws that pertain to performing background checks, but unfortunately litigation is the only real enforcement of these laws. Working with a background check company that is Accredited will help alleviate some of these potential issues.
Another way to vet your screening vendor is to ask them questions, ask to see their authorization forms and disclosures, and ask them about their process.
- Are you Accredited by the Professional Background Screening Association?
- May we see a copy of the forms that are sent to our applicants?
- What happens when we need state specific forms for a state that requires it?
- How is the Pre-Adverse / Adverse Action process work with your company?
- Are your records sourced directly from the courthouses?
Not every lawsuit can be avoided. The key is to minimize your exposure to lawsuits associated with background checks by following the FCRA and by having the proper processes in place to stay in compliance.
*Disclosure: This is not legal advice in any way and should not be considered as such. The information provided should be reviewed by your own legal counsel.