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FCRA Basics

What You Need to Know

If you’ve spent any time looking around our site, you’ll know that the FRCA is the Fair Credit Reporting Act. It covers the information that can be contained in credit reports, and how this information may be used when obtained by a third party.

The primary function of the FCRA as it relates to background screening is this: data from a background check can be used in your hiring process, however it must be compliant within Federal and State laws, as well as your internal policies. Any negative hiring decisions based on the information contained in the report must follow strict FCRA procedures. This data is not limited to credit reports, as the name implies, rather all information gathered during a background check.

FCRA Basics

For the purpose of this article, we will cover federal basics. You will also want to stay on top of local regulations as states may have additional requirements. What does this include?

Responsibility

If you perform a background check it is both your responsibility and that of the company you hire to be FCRA compliant. You are just as much responsible for FCRA compliance as any company you hire. Understanding FCRA requirements will help you ensure that any company you choose is taking the necessary steps to be compliant.

Notify

If you are going to use information gathered from a background screen as part of a hiring decision, you are required to notify the applicant very specifically. You cannot simply add a checkbox to an employment application. As an employer, you must provide the applicant with a Disclosure Notice on a stand alone document, and you must have the candidate sign an authorization form prior to initiating the background search.

FCRA Basics

Treat Everyone Equally

This means performing the same background check for everyone, not just specific groups of people. For example, it is illegal to only background check people of certain ethnic backgrounds, or those over 40. Discrimination in any form is in violation in federal law, so the best policy is to screen all applicant equally to avoid inadvertently discriminating.

Share Results

If the information you gather is used for an employment decision, you are required to share that information with the applicant and give them adequate time to research and dispute the findings. As we know, sometimes errors are made, and this gives the applicant time to respond.

Work With An Expert

As always, when it comes to compliance, there is so much more to consider than just the basics. That is why it is a good idea to partner with a background check company that works with you to ensure that every step of the process is compliant to reduce your risk. If you find keeping up with changes in in state and federal regulations to be daunting, consider partnering with a company that will alert you to changes as they are enacted. 

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