In the world of background checks, compliance is a must. It’s simply a fact of life for both Consumer Reporting Agencies (CRAs) and any organization or business that screens applicants. A nuanced topic though it may be, we’re here to help you sort through the industry-, permissible purpose-, and location-specific requirements to allow you to successfully keep your workplace secure under the letter of the law.
Below, we’ve broken down the most important factors to allow you to hone in on what’s relevant to your organization.
Rules & Regulations
When screening, compliance is a joint effort between the agency running the report and the end user of that report. The issuing agency must securely collect consumer information as defined by the Fair Credit Reporting Act (FCRA) while two federal agencies—the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB)—enforce these regulations by issuing fines and punitive damages.
Background screening companies can also become accredited by the Professional Background Screening Association’s (PBSA’s) Background Screening Agency Accreditation Program (BSAAP). In short, accredited CRAs like us are committed to excellence and delivering the highest level of standards in six critical areas through accountability and continuous improvement of policies and procedures. For more information about this designation and the process of achieving it, check out our PBSA Accreditation page.
Of course, every business is part of an industry—some of which have specific requirements regarding background checks and additional searches (credit history, social media, USDOT, etc.). Organizations in education, finance, healthcare, or transportation (to name a few) need to adhere to specific constraints regarding hiring and continued employment practices. If you have questions about the specifics of your industry, check with your legal counsel.
End User Responsibilities
When working with an accredited background check company, companies must agree to several policies as end users. These may include, but are not limited to:
- Reports won’t be used to violate the law
- Consent has been given by applicants
- Reports will be used confidentially
- You won’t sell or disclose information to a third party
- Applicant identities are confirmed
Further, a permissible purpose must be present to run a background check. Most often this is a Written Instruction for site access or personal screening, a Legitimate Business Need like tenant screening, or for Employment such as hiring, promotion, or retention. No matter the purpose, the organization must first be credentialed before they’re allowed to order a report. Most often, this process involves verifying business information, licenses, and tax documents; it may occasionally require an on-site inspection as well.
Among the myriad of laws and regulations are two that have been taking the country by storm in recent years: Clean Slate and Ban the Box laws. Essentially, these are legislations passed by individual states to limit the amount of information employers can use to deny individuals employment based on criminal history. The former removes eligible offenses from an individual’s criminal record once they’ve completed their sentence and any post-sentence requirements such as parole or probation and have committed any re-offenses. The latter simply bars employers from asking about criminal history on job applications.
To learn more about these measures and if/how they affect your state, read our previous coverage on these subjects here:
Accompanying the larger regulations at play are additional necessary forms and procedures. Each carries its own significance and it’s important not to neglect them:
Disclosure & Authorization forms ensure applicants consent to being screened. All candidates must complete this form either on paper or electronically, it must be up to date, and it must include what will and may be searched.
Adverse Action means rescinding a job offer due to the results of a background check. This is a two-step process where a letter is sent to the applicant in advance to give them time to review the accuracy and completeness of their report and a chance to dispute inaccuracies.
If a prospective hire chooses to dispute information on their report, the CRA is required to perform a re-investigation and notify the furnishers of the data in question. Both the end user and applicant will be notified of the results of said re-investigation.
In summary, compliance should always be top of mind. Your organization needs to adhere to state and industry regulations, be properly credentialed, follow agreed-upon policies and procedures, and provide candidates with the tools they need to ensure their report is accurate.
For questions related to industry-specific standards, consult your legal adviser. For additional information, check out the Society for Human Resource Management’s website or our archive of compliance coverage.