Before running a background check on a candidate, the Fair Credit Report Act (FCRA) requires that employers:
- Provide the candidate with a written disclosure which states that a background check is being run for employment purposes.
- Provide any applicable state disclosures
- Obtain the candidate's consent through a written authorization
The FCRA states that an employer can’t obtain a background report unless a clear and conspicuous disclosure has been made to the candidate, in a document that consists solely of the disclosure.
The employer has to inform the applicant, in writing, that a background check will be run for employment purposes. This must be done in a very clear way:
- The disclosure should not be within a job application
- It should not be provided in small font
- It should not be amongst other information relating to duties of the job
The disclosure must be provided in a document that contains only information about the background check. Many lawsuits filed against employers allege that the disclosure wasn’t clear and conspicuous and wasn’t provided in a stand-alone document due to the presence of “extraneous language.” Some states will have additional disclosure and formatting requirements.
In order to run an employment background check legally, the Fair Credit Reporting Act (FCRA) requires that employers obtain written authorization from the job candidate or employee before they’re screened.
By obtaining consent, employers can certify that they have:
- Notified candidates about the details of the background screening process
- Informed candidates about their legal rights in case of an adverse action
- Taken steps to ensure candidate privacy and prevent discrimination
Background check laws are complex and may depend on your jurisdiction. For specific compliance questions regarding your hiring process, we recommend consulting with your legal counsel.
Adverse action is a legal process employers must follow if they’re considering not hiring, not promoting, or firing a candidate based on information found in a background check. “Adverse action” is a legal way to define an action that is unfavorable to a candidate, such as not getting hired based on a criminal record. This two-step notification process is required under a federal law called the Fair Credit Reporting Act (FCRA).
The adverse action process requires that employers send candidates two main notices:
- A pre-adverse action notice. This notice is generally in writing and serves to inform the candidate that the employer is considering taking adverse action against them. This notice must include a copy of the candidate's background check and a copy of A Summary of Your Rights Under the Fair Credit Reporting Act.
- A final adverse action notice. Between the pre- and final adverse action notices, an employer must give the candidate a reasonable amount of time - typically five business days - to go over their background check, so that the candidate can dispute any incomplete or inaccurate information.
If the candidate does dispute information in their background check results, then the company that ran the check and the data vendor must reinvestigate all the information the candidate dispute.
If the investigation finds that the information is incorrect, the background check company must give the candidate a copy of the corrected report.
An employer can only legally send the candidate a final notice of adverse action after providing the pre-adverse action notice, complying with the waiting period applicable to them, and providing a final adverse action notice.
Please note that various states and/or municipalities may have additional requirements for adverse action. We recommend consulting with your legal counsel if you have questions regarding adverse action requirements in your jurisdiction.