Three costly background check mistakes – avoid those land mines!

Detail orientation, detail orientation, detail orientation – it’s a requirement for proper background screening. While this may not be headline news, we should all be reminded of this rule, and often.

Our profession is defined by precise rules and regulations, with potentially stiff fines for violations. All of us working in HR, and GroupOne Background Screening’s staff has decades of experience in the field, can attest to the many areas requiring extreme caution. Fair Credit Reporting Act (FCRA) compliance is no exception.

The FCRA covers both consumer credit reporting and criminal history. Getting reports on someone’s poor credit or prior convictions requires strict regulations as to how the information is used. Otherwise, you might step on a figurative land mine and, it won’t be pretty.

Background screening errors for non-compliance with FRCA usually fall into three categories:

• Not paying attention to detail;
• Sloppy processes;
• Poor handling of negative reports.

1: Be detail-oriented with forms
Sometimes it seems like we’re buried in paperwork. We get it. But don’t be tempted to minimize the forms you require applicants to sign. We’ve heard of companies combining items for consent, and this is always a mistake. It may be well-intentioned, but as they say, “The road to a certain place is paved with good intentions.” The FCRA’s procedures are prescribed with exact detail, down to the font size. Do not deviate!

The consent to collect credit or criminal history must be requested on separate forms. There have been costly fines for employers failing to meet this FCRA requirement. Adding provisions in the document not required by the FCRA will also land you in court.

2: No background checks without consent
A certain national retailer (actually, there’s been more than one) was hit with a class action suit alleging they routinely ran background checks on employees without their consent. The application did not ask for written consent for a third-party reporting agency to obtain a report. In one case, weeks after the consumer report was obtained, employees were finally given a disclosure and authorization form.

The company had to pay $1,000 for each FCRA violation, and more than 1,000 employees were on the payroll. Now that’s a land mine.

To avoid this costly mistake, simply follow the FCRA language and ensure a separate form requesting written consent to credit or criminal history screening – to include any check by a qualified third party such as GroupOne – is incorporated into your basic hiring procedures.

3: Be careful with timelines when negative information is on a report
The FCRA requires a notification process to include allowing time for an applicant to respond to and correct an erroneous report.

During the notice and correction period following a negative report, applicants cannot suffer adverse consequences such as being denied the job. This means if you receive a negative background report, the job must be held open for a reasonable amount of time for the applicant to verify its accuracy.

If an employer fails to follow this process, with an applicant not receiving an opportunity to correct a false report, then prepare for yet another liability land mine. A federal court found a certain employer’s screening process to be “reckless” in this regard, and punitive damages were awarded. Once again, the cost did not amount to that of a speeding ticket. Rather, it was thousands of dollars.

The bigger the company, the bigger the land mine. One case cost a certain retailer with more than 60,000 employees a total of $3 million. The retailer failed to provide a stand-alone disclosure for background checks, nor did they notify before adverse actions were taken based upon the reports.

Please note, class action lawsuits related to FCRA violations are growing across the U.S., with some companies with experienced staffs having to pay millions of dollars due to mistakes. No matter the size of the company, it’s always important to remember – detail orientation, detail orientation, detail orientation. It’s a good way to avoid those land mines.

The information and opinions expressed are for educational purposes only and are based on current practice, industry related knowledge and business reports. The information provided shall not be construed as legal advice, express or implied.