FCRAMany companies, such as Disney and Kmart, are learning first-hand that it literally pays to comply with the Fair Credit Reporting Act. Failure-to-notify charges have cost companies thousands and even millions of dollars.

In fact, Human Resource Executive Online reports that 368 class-action lawsuits have been filed under the FCRA since January 1, 2010, regarding failures of companies to properly notify people of adverse actions against them. Companies have been forced to pay up to nearly $6 million in settlement fees.

If your company follows proper FCRA procedures, you have nothing to worry about. However, if you’re the least bit unsure there’s no glitches in the system, it’s time to stop everything and examine your processes and procedures immediately.

Employment Screening Done Right
It’s essential that your HR and management teams are aware of the proper FCRA reporting procedures and follow them precisely. If there’s any doubt that mistakes could be made, it’s a smart idea to outsource adverse-action notifications to your screening provider, to make sure everything is handled correctly.

If you’re planning to conduct a background check on a candidate or employee, or request a copy of their credit report, you better be sure you get their approval in writing, as failing to do so is a lawsuit waiting to happen. You must inform the person any information found could be used to make an employment decision.

  • Pre-Adverse Action Procedures.
    You must provide a candidate with a copy of their credit report or background check if you may use the information found to take an “adverse action,” such as denying their application. You’ll also need to provide them with a document called, “A Summary of Your Rights Under the Fair Credit Reporting Act,” prior to taking action.
  • Adverse Action Procedures.
    If you plan to take adverse action against an employee or a candidate based on information in their credit report or background check, you’re required to inform them. Your notice must include the name and contact information of the company that provided the credit report or background check, a statement that the company who provided you with the information didn’t decide to take adverse action and can’t provide any specific reasons for it, and a notice of their right to dispute the accuracy or completeness of any information and obtain a free report from the company who supplied the information, if requested within 60 days.

For more information visit the FTC website.

Serving Washington DC, Virginia, and Maryland, Standard Hire Staffing can help improve your recruitment practices. Our expert recruiters can advise you and assist you in your background checks or other staffing needs.

Have additional questions? Contact us today for more information on how a partnership with Hire Standard can assist you in your job search today!