Most of our small business clients have never conducted pre
employment screenings. As the economy has tightened the need to hire the best
suited candidate has become more of a focus (The cost of a bad hire can be upwards
of $50,000). So smaller employers have sought to conduct pre employment
screenings to give them more information about their candidates. They know the
hiring basics (formal employment applications, conduct interviews, etc) but
rarely have they delved into an applicants’ character and past. When they do,
most have fallen into stereotypical hiring process traps that put them in
jeopardy of a court visit. Last year alone there were millions of dollars
awarded in class action suits for Fair Credit Report Act (FCRA) violations.
Some common mistakes employers make are:
- Failure to have a disclosure of the screening separate from the application
- Burying the disclosure of the screening with application questions
- Failure to provide proper pre-adverse action and/or adverse action notices
- Failure to include a copy of the report or a Summary of Rights with the pre-adverse notice
Small business owners don’t have the benefits of human
resource departments. They have either just started a business or have been in
business for many years. Whichever the case, the Fair Credit Reporting Act and
guidelines set by the Equal Employment Opportunity Commission are news to them.
They are not intentionally trying to violate the rights of potential employees;
they just don’t know the rules.
Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) was passed by Congress in 1996 and went into effect
September 30, 1997. As the Act is
titled, it was initially passed to regulate the collection and use of credit
information by credit bureaus. The goal being to provide consumers a way to
access information contained in their credit bureau files. Due to the ever
growing amount of incorrect information contained in these files, the act also
provided a mechanism in which consumers could dispute the records. Basically,
it is designed to protect the privacy of consumers and to guarantee that
the information supplied by reporting agencies is as accurate as possible.
The FCRA has been amended several times since being passed. With
negligent hiring and privacy issue complaints increasing since the passage of
the Act, the FCRA was amended to apply to all consumer type reports. Too
include the pre employment screenings completed during the hiring process. A
consumer report (the information collected during the pre employment screening},
contains information about the applicant’s personal and credit characteristics,
character, general reputation, and lifestyle.
The FCRA also provides procedures for obtaining consumer
information and how it is to be used and disseminated during a pre employment
screening. The Federal Trade Commission enforces all aspects of the FCRA.
Equal Employment Opportunity Commission
The FCRA regulates how consumer report data is collected and
used. Part of that data are criminal records. The Equal Employment Opportunity
Commission (EEOC) ensures that the information found in the criminal records
collected during the pre employment screening is not used to discriminate
against the prospective employee. This is where the employers’ fall victim-How
they react to and use the criminal record data.
The Civil Rights Act of 1964, Title VII, states that employers
cannot reject or fire qualified individuals who have criminal records when the
criminal history has no bearing on the individual’s fitness or ability to
perform the job. The EEOC is quite clear in its position on employers’ use of
criminal background checks for employee hiring and retention: “Using such records as an absolute measure to
prevent an individual from being hired could limit the employment opportunities
of some protected groups and thus cannot be used in this way.” In
making a decision, the employer must consider the nature of the job, the nature
and seriousness of the offense, and the length of time since it occurred.
The FCRA states that the applicant has a right to view the
information contained in the consumer report and have a chance to dispute the
record. Following this lead, the
EEOC encourages the employer to personally interview the applicant and allow
them the chance to refute and/or explain the criminal record.
It’s all about being fair. The employer wants to make the
right decision to avoid later costs and problems. The applicant is seeking
employment. As with the decisions made in other areas of the business, the
employer needs to make informed decisions by reviewing and understanding all of
the information gathered during the screening process. This review process
should include a personal interview so the employer has the chance to hear the
rest of the story.
Scroll through our Information and Resources page regarding the FCRA, EEOC, and for helpful information.
