If you’re researching background checks, you’ll probably come across the Fair Credit Reporting Act (FCRA). You might see screening companies say they’re FCRA compliant or read about the dangers of violating FCRA guidelines. You may think that this only applies to multi-million dollar companies, but did you know that even small business need to follow FCRA standards?
Yes, all businesses using employment background checks must follow FCRA standards. Breaching the FCRA’s guidelines can lead to lawsuits, civil penalties, and jail time. 422 lawsuits were filed under the Fair Credit Reporting Act in February of 2018 alone.
If you don’t want a lawsuit, then you need to follow FCRA guidelines when running background screenings. To do this you’ll need to answer a few questions, including:
Let’s find out the answers to these questions.
The Fair Credit Reporting Act is a set of federal laws that protect people’s information when it is used for credit checks, tenant background checks, or employment purposes. It regulates how businesses can use consumer information, what information they can consider, and allows the consumer to review their own data.
The FCRA was enacted in 1970 because credit reporting agencies were maintaining old, inaccurate, and sometimes fabricated reports on individuals. The reports could include anything from a person’s marital status to their drinking habits or national origin. These reports could be bought by businesses that could deny services or opportunities based on the information. They could also be used in law enforcement cases. The individual had no way to see their report or dispute incorrect information.
The FCRA allowed individuals to see their information and stopped reporting agencies from using false or sensitive information. So, the FCRA is a critical protection for people, but do only consumers benefit from the FCRA? Does it help businesses as well?
The FCRA primarily protects the applicant that is giving their information. It gives them the right to review information, to know who is running the background check, and to be notified if you make an adverse decision based on the results.
But, the FCRA also helps the businesses involved by requiring them to have a standard way of dealing with applicants’ data. It also requires them to be transparent about their background screening practices. This creates a fair hiring process and helps you find the best applicant for the job. So the FCRA does help employers, but it also requires they follow strict guidelines. What does the FCRA require employers to do?
The FCRA has strict requirements for employers. Here are some requirements that are often cited in lawsuits.
And that’s just what employers need to do. The FCRA has requirements for screening companies as well. What does the FCRA require for screening companies?
The FCRA requires screening companies follow all FCRA standards. One of these standards is ensuring their criminal background checks and credit background checks have the maximum accuracy possible. This requires them to verify any information they find. That means companies that claim to give “instant” background check results are not FCRA compliant.
Because FCRA lawsuits tend to name the employer’s company and the background check company in the suit, more background check companies are concerned about following FCRA standards. Reputable background check companies usually have FCRA compliance policies and procedures in place for all their background checks. But why is it so important to be FCRA compliant? What happens if you’re not?
Violating FCRA standards can lead to different penalties depending on the type of breach and how many times you’ve breached it.
Since the penalties for breaching the FCRA are so high, how can you follow FCRA standards?
The FCRA is an extremely technical statute, so you may want a lawyer to look over your documents and hiring process. But in general, this is how you can follow FCRA standards:
At Trusted Employees, we offer a wide variety of FCRA compliant background checks. We can answer any questions you have about our process and help you find the right background checks for your unique situation. Contact us today to learn more about our background check packages.