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Background Screening Compliance – Knowing the Basics!

Like most topics in the HR world, there is more than meets the eye when it comes to Background Screening. It is quite a litigious industry and because of this, while conducting background checks is vital for employers, it is equally important to know the compliance regulations around background screening. Employers want to mitigate their risks, at all costs. Conducting background checks is proven to reduce workplace violence, protect against negligent hiring lawsuits, and reduce employee turnover, among many other valid reasons. Below are three key items to consider, and regularly review, with regard to your background screening policy.

Where to begin – Choosing a vendor and getting started:

 The first step in implementing, or when reviewing, your background screening policy, is making sure you have the right partner. Your background screening vendor plays a vital role in this process. Understanding that you have options and having a consultative relationship with your vendor, will ensure you are working together to achieve the policy you, as an employer, see fit for the company. One size does not fit all when it comes to background screening. There are different items to consider when deciding what type of searches you will run:

  • Are you regulated to run certain background checks by the state or federal government?
  • What staff, if any, will be exposed to vulnerable population and or personal/financial information?
  • Are you implementing a Drug Free workplace policy?
  • Are you verifying Education, Employment, License, Driver License…?

There are too many variables to list, which is why working with your vendor is crucial. Ask your vendor what industry standard is. What do other companies in your industry, and of your size, typically do? Compare this with your current policy. Most importantly, know and understand exactly what you are running and how the searches are performed.

Authorization and Disclosure Forms:

The FCRA (Fair Credit Reporting Act) makes an employer’s requirements very clear regarding obtaining Authorization and Disclosure. In short, it is imperative that employers have FCRA counsel review their forms and processes, to ensure full compliance. Many employers, around the country, are being sued for not being in compliance. Some of the most popular class action lawsuits are based on:

  • Release of liability language
  • Not obtaining the needed authorization and disclosure, before procuring the background report
  • Not having a “clear and conspicuous” disclosure, per the FCRA

Review these forms and processes regularly with your counsel, your staff processing background checks, and your vendor. Is your vendor providing you sample forms? If so, great, but please remember that these forms are your responsibility, as the employer, and so they are ultimately your responsibility to make sure they are up to date, compliant, and meet your process.

Adverse Action:

If you, as the employer, are taking adverse action, in part or in whole because of the background check your Consumer Reporting Agency provided you, there are additional steps that must be taken. The adverse action process will happen before making a final decision, this is key. Here are just a few items that are to be included in each notice (this is not a comprehensive list):

Pre-Adverse (First Notice)

  • Explain the intent to take adverse action
  • Provide a copy of the report
  • Provide a copy of the consumer’s FCRA Summary of Rights
  • This is the time for the consumer to dispute and for the employer to review the individual circumstances and assess what the applicant provides

Adverse (Second/Final Notice)

  • Explain that adverse action has now been taken
  • Provide dispute process and information, again
  • Explain the consumers’ rights to another free consumer report copy

The set time between the notices has not been defined for employers. The FTC (Federal Trade Commission) has previously suggested five business days is a reasonable amount of time but, as with everything else we have talked about, this should be reviewed with your counsel and set per your business practices.

While there are many other items to consider and review, this is a good starting point. Remember that your background screening policy should be a living document, regularly reviewed and updated as your business and the industry changes. Ban the Box laws, for example, are being implemented and are changing regularly. Stay in tune with your local and national HR associations, blogs, and networks, to track these changes. Ask your background screening vendor for resources and information to help to stay up to date in this ever-changing field. Most importantly, stay proactive, educate yourself, and never stop asking questions!


Nicole Roedel
Executive Director
First Choice Background Screening



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