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How to Avoid Workplace Background Check Violations

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By Jonathan R. Tung, Esq. on August 03, 2016 2:14 PM

You've likely heard about big-time companies that have felt the sting of the FCRA knife. Workplace background check violations are serious issues employers shouldn't ignore.

Below, we provide a quick overview of The Fair Credit Reporting Act. We also cover some steps you can take as in-house counsel to best protect your company from the new federal cloud passing over corporate clients.

Fair Credit Reporting Act

Home Depot, Wells Fargo. These are some of the more memorable names that have been embroiled in recent scandals involving the Fair Credit Reporting Act. This law lays out several highly technical and dicey requirements that employers must follow if they seek to run a background check or credit check on their employees or would-be employees. Call it a sign of the times, but the federal FCRA is somewhat onerous. Nonetheless, it appears to be a reflection of what workers want.

Common Traps

What gets employers? Failure to obtain written consent to a full background check is a common one. Another is a failure to share the background check findings with the employee or potential-employee before taking an adverse action. Not only that, employers are obligated to give not only notice, but also ample time for employees to respond. Sounds like a lot, but the fallout of non-compliance can be even worse.

Consumer Reporting Agencies

FCRA also mentions "Consumer Reporting Agencies" (CRAs) in the context of background checks. These can be a major problem because a good many of these CRAs are not compliant to the very strict terms of FCRA, thereby exposing the employers to non-willful -- yet still actionable -- violations of federal law.

Steps to Take

Hopefully, your company is small enough for you to do this on your own with your own in-house team. Go to your employment and on-boarding papers. Make sure that the language is assiduously compliant with FCRA. Next, conduct due diligence and make the language even tighter in order to get compliant with your local jurisdiction's state version of FCRA.

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