Heigh Ho, Heigh Ho, It’s Off to Court They Go!
On November 1st, 2013, The Walt Disney Company joined a growing list of employers headed to court over allegations of FCRA violations. The case is still in its early stages and Disney has yet to be given a chance to respond. If the plaintiff is successful, Disney could be part of a growing list of organizations forced to pay a large settlement over failure to comply with FCRA regulations.
The Fair Credit Reporting Act (FCRA) is the stuff class action lawyers dream about. If a company’s procedures aren’t in compliance with the FCRA, it is likely a large group of individuals will have been affected. Plaintiffs are eligible to receive statutory damages (no proof of actual damages required) of $100.00 to $1000.00 per violation. There is also no cap on the damages that can be awarded against the defendant. Furthermore, if it is found that an employer willfully violated the FCRA, they can be on the hook for punitive damages, costs of litigation and reasonable attorney’s fees. As the use of background checks continues to increase, so will the volume of case law. Courts are awarding settlements in the millions and lawyers are seeing green.
How Did We Get to this Point?
Background checks have become an invaluable part of the hiring process. Over 80% of employers are using background checks to help protect their customers, their brand, and their fellow employees against unsafe hires. Used correctly, background checks save organizations money and offer a great deal of insight into their applicant pool. In many instances, background checks are mandated to protect vulnerable populations. Employers are trying to do the right thing. Unfortunately, in our quest to do what is right, mistakes can be made and individual’s rights can suffer. For the past 40 years, the FCRA has protected individuals against unfair information being used against them in a background check. If you are using a background check company, you are subject to FCRA regulations. Failure to adhere to these regulations can result in serious consequences.
Justifacts has created a detailed blog series dedicated to the explanation of the specific sections of the Fair Credit Reporting Act that are pertinent to reports used for employment purposes: Understanding the FCRA and Background Screening Laws & Regulations
With all this talk of lawsuits, it really makes any honest employer want to throw their hands in the air. It can feel as though you are caught in a no-win situation. You are negligent if don’t conduct a background check and vulnerable if you do. It can be overwhelming. Fortunately, it is quite easy to remain compliant with the FCRA. A partnership with a reputable background screening firm can go a long way towards easing your fears.
In the simplest possible terms, employers just need to remember four easy steps.
How to Keep the villains Out of Your Hiring Story:
- Disclosure – The FCRA requires employers to provide a disclosure statement about background checks to their applicants. This disclosure statement must be clear and concise. It should be completely separate from the job application.
- Applicant Authorization – Employers must obtain a written or electronic authorization from the applicant giving express permission to conduct a background check.
- Pre-Adverse Action Letter – If negative information is reported in a background check and based on that information the decision has been made to deny employment, a Pre-Adverse Action Letter must be sent to the applicant. This letter is going to include a copy of the background check and the FCRA Summary of Consumer Rights and your CRA’s contact information. The purpose of this letter is to allow the applicant an opportunity to dispute any information in the report. If any inaccuracies are uncovered, corrections must be made to the report and the hiring process can continue. Employers must allow applicants a “reasonable time” to dispute the report. This has generally been defined as five working days. If this reasonable time has passed, and the applicant does not dispute the information, employers may now move to the next step;
- Adverse Action Letter – This notification is going to disclose the final decision to deny employment based “in whole or in part” on the results of the background check. Again with this letter, you are going to include the completed background check as well as the FCRA Summary of Consumer Rights and your CRA’s contact information.
For more detailed information about the FCRA, please check out our ten-part blog series: Understanding the FCRA and Background Screening Laws & Regulations
We are Here to Help!
Justifacts has over 30 years of experience providing quality, compliant background checks. We provide detailed educational information on FCRA regulations, sample disclosure, and authorization forms. This fully automated Adverse Action tool can assist our clients in generating and tracking the entire adverse action process. Our Compliance Team is available to help handle situations as they arise regarding adverse information that is found on an applicant’s report.
Therefore, to employers, it is possible to get the information you need without fear of repercussions down the road. FCRA Compliance does not have to be complicated and Justifacts is here to help! As our favorite warthog would say, “Hakuna Matata” – No Worries!
It is important to note that Justifacts is providing this information as a service to our clients. None of the information contained herein should be construed as legal advice, nor is Justifacts engaged to provide legal advice. We go to great lengths to make sure our information is accurate and useful. We recommend you consult your attorney or legal department if you want assurance that our information, and your interpretation of it, is appropriate to your particular situation.
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