Complying with laws and regulations when using VICTIG Background Checks
In the current business climate, finding workers is probably one of your top challenges. At the same time, finding and hiring an unsuitable worker can be worse than no worker. Employers must assess the nature of the job, and its degree of risk to third parties (and their business) and then perform a reasonable background investigation to ensure the applicant is competent and fit for the
position for which they are being considered. And so, you have partnered with VICTIG to provide you with the information you need for these evaluations.
As a company using the information you obtain from us to assist you in making employment decisions, you must comply with federal law. The federal law that addresses your responsibilities is The Fair Credit Reporting Act. (And yes, if they named the law today, it might be called The Fair Credit and Employment Reporting Act or even The Fair Consumer Reporting Act. Don’t let the title of the
law fool you just because you are not extending credit to consumers.)
“Employment decisions” do not just mean new hires. If you use the information to obtain from us for retention, promotion, or reassignment, that is an “employment decision.” The information you obtain from us does not have to be the only or even principal reason for your decision. If the information “whole or part” affects any adverse decision regarding the consumer, you must follow specific steps outlined by the Fair Credit Reporting Act (FCRA).
What is FCRA Compliance?
The Fair Credit Reporting Act (FCRA) is a federal law, enacted in 1970, to assist consumers with errors or inaccuracies in their credit reports. Since 1970, the FCRA has been amended and expanded to include much more than just consumer credit reports. Today, compliance with the FCRA requires employers to obtain background checks that are valid & accurate, safeguarding job candidates and preventing the misuse of applicant information. So, what does FCRA compliance look like for your company when using VICTIG?
About FCRA Compliance & Background Checks
Permissible Purpose
For starters, you must have a permissible purpose for ordering information from VICTIG Background Checks and we must obtain certification from you of the permissible purpose before fulfilling your request. Ordering a report on your ex or daughter’s new boyfriend is not a permissible purpose and your workers should be aware that just because they are ordering reports from us all day, that doesn’t mean they have carte blanche to use the service for other purposes.
Employment is a permissible purpose. But that does not mean that because you like “the cut of John or Jane Doe’s” jib” you can order information on them to see if you want to pursue them for employment. You must not only have a permissible purpose, but you must also explicitly disclose to the person that you are going to order information that could be used as a factor in your decision and get their explicit authorization to do so.
FCRA Background Checks: Before and After You Request Information for Employment Purposes
The FCRA requires you to certify and do certain things before you order information from us.
Employment background checks also are known as consumer reports. They can include information from a variety of sources, including credit reports and criminal
records.
When you use consumer reports to make employment decisions, including hiring, retention, promotion, or reassignment, you must comply with the Fair Credit Reporting Act (FCRA). The Federal Trade Commission (FTC) enforces the FCRA.
Prior to Requesting a Report
You must tell the applicant or employee that you might use information in their consumer report for decisions related to their employment. This notice must be in writing and in a stand-alone format. In FCRA terms, this is known as the Disclosure and there are explicit requirements. For example, the notice must be in a standalone document and cannot be in an employment application. You can include some minor additional information in the notice/disclosure, like a brief description of the nature of consumer reports, but only if it does not confuse or detract from the notice.
You must then get written permission from the applicant or employee. This can be part of the document you use to notify/disclose to the person that you will get a consumer report. If you want the authorization to allow you to get consumer reports throughout the person’s employment, make sure you say so clearly and conspicuously.
You must then certify compliance to VICTIG. You must certify that you:
- notified the applicant or employee and got their permission to get a consumer report;
- complied with all of the FCRA requirements; and
- will not discriminate against the applicant or employee or otherwise misuse the information, as provided by any applicable federal or state equal opportunity laws or regulations.
VICTIG has obtained your written certification but our ordering system also has you make these certifications before each order. The certifications are then date-stamped and securely stored should a question arise in the future.
Thus far, we have addressed federal law, but before ordering information you should also be familiar with state laws that can affect permissibility and timing. For example, some states have restrictions on the use of credit reports for employment purposes and some states require a conditional offer of employment before ordering a criminal record. VICTIG makes a state rules register program available to you on our system so that you may review state laws by topic or, review state laws and regulations by the state.
After you Order Information and Before You Take an Adverse Action
Before you reject a job application, reassign or terminate an employee, deny a promotion, or take any other adverse employment action based on information in a consumer report, you must give the applicant or employee:
- a notice that includes a copy of the consumer report you relied on to make
your decision; and - a copy of A Summary of Your Rights Under the Fair Credit Reporting Act,
which VICTIG has given to you.
Giving the person the notice in advance gives the person the opportunity to review the report and tell you if it is correct. There may be a need to investigate further. Some people do have the same name and date of birth, have had their identities stolen, or had a court jurisdiction make a mistake.
After You Take an Adverse Action
If you have received information from VICTIG and determined that it is job-related, consistent with business necessity, and have gone through your pre-adverse action requirements, you must now give the applicant or employee notice of that fact.
An adverse action notice tells people about their rights to see information being reported about them and to correct inaccurate information. The notice must include:
- the name, address, and phone number of VICTIG (assuming that we
provided the information and that was in whole or partly responsible for the
adverse action; - a statement that VICTIG did not make the decision to take the unfavorable
action and can’t give specific reasons for it; and - a notice of the person’s right to dispute the accuracy or completeness of any information VICTIG furnished, and to get an additional free report from VICTIG if the person asks for it within 60 days.
Investigative Reports
If you use “investigative reports” you have additional obligations under the FCRA. These obligations include giving written notice that you may request or have requested an investigative consumer report, and giving a statement that the person has a right to request additional disclosures and a summary of the scope and substance of the report. (See 15 U.S.C. section 1681d(a), (b)).
An “investigation report” is “a consumer report or portion thereof in which information on a consumer’s character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer reported on or with others with whom he is acquainted or who may have knowledge concerning any such items of information. However, such information shall not include specific factual information on a consumer’s credit record obtained directly from a creditor of the consumer or from a consumer reporting agency when such information was obtained directly from a creditor of the consumer or from the consumer.”
Disposing of Consumer Reports
When you’re done using a consumer report, you must securely dispose of the report and any information you gathered from it. That can include burning, pulverizing, or shredding paper documents and disposing of electronic information so that it can’t be read or reconstructed. For more information, see Disposing of Consumer Report Information? Rule Tells How.
FCRA Compliance and Background Checks: A Summary
While compliance requirements can seem daunting, the FCRA overall is a good law that imposes sets the framework for consumers, users, and providers. It imposes obligations and protections to all three parties.
VICTIG routinely publishes educational compliance materials and while we cannot provide legal advice, we want to assist you with FCRA compliance in any way we legally can. We have a library of templates (e.g. disclosure/authorization, pre/post adverse action, and state-specific forms) that you may discuss with your legal counsel. And as mentioned, we invest in the State Rules Register that is available to you online to help with state-specific or, law-specific issues. This resource may save your legal counsel a lot of time. And, even given that we cannot provide legal advice, we are happy to assist you or your counsel in any way we can if an issue comes up.
If you are seeking a background check partner that will assist you in remaining FCRA Compliant, please schedule a time to meet with our sales team.
