Oh, the FCRA. The Fair Credit Reporting Act, overseen by the Consumer Financial Protection Bureau (and also enforced by the Federal Trade Commission), has been tripping up employers over the past several years. As many human resources leaders and recruiters realize, the FCRA requires that candidates be notified that a background check will be conducted for employment purposes, and employers must obtain candidates’ written authorization to obtain one.
That may not sound too tricky, but a study by Lex Machina found that there has been a 100% increase in FCRA-related lawsuits over the past decade. With over 13,000 cases filed in 2018 alone, employers are realizing how important it is to take the fine points of the FCRA seriously, very seriously indeed.
Many of the key vulnerabilities being tested in the courts relate to disclosure forms. And sadly, in one case, the verdict came down to a misplaced semi-colon (along with state law related notifications). To help avoid negative and costly outcomes, it’s always a good idea to have FCRA forms reviewed by legal counsel on at least an annual basis. Such experts can help evaluate whether the forms meet the FCRA requirements to be “clear and conspicuous” and consist “solely of the disclosure.”
The courts seem to be taking these requirements to mean that FCRA disclosure form must be presented in a standalone format, so this is no time to save paper! Better yet, employers should seriously consider moving to an electronic process if they have not done so already. In conjunction with qualified legal counsel, employers should consider creating separate FCRA-related forms while checking to determine if they:
Of course, disclosure forms are not the only FCRA issues raising red flags in the courts. Asurint is also watching lawsuits related to the two-step Pre-Adverse and Adverse Action process. If you want to learn more, we addressed these and other issues in an educational webinar on FCRA compliance considerations. Watch the webinar on-demand now.
That may not sound too tricky, but a study by Lex Machina found that there has been a 100% increase in FCRA-related lawsuits over the past decade. With over 13,000 cases filed in 2018 alone, employers are realizing how important it is to take the fine points of the FCRA seriously, very seriously indeed.
Many of the key vulnerabilities being tested in the courts relate to disclosure forms. And sadly, in one case, the verdict came down to a misplaced semi-colon (along with state law related notifications). To help avoid negative and costly outcomes, it’s always a good idea to have FCRA forms reviewed by legal counsel on at least an annual basis. Such experts can help evaluate whether the forms meet the FCRA requirements to be “clear and conspicuous” and consist “solely of the disclosure.”
The courts seem to be taking these requirements to mean that FCRA disclosure form must be presented in a standalone format, so this is no time to save paper! Better yet, employers should seriously consider moving to an electronic process if they have not done so already. In conjunction with qualified legal counsel, employers should consider creating separate FCRA-related forms while checking to determine if they:
- Make a clear and conspicuous statement that a consumer report may be obtained for employment purposes
- Request the candidate’s written authorization to procure a consumer report
- Consist of two separate documents—one for the disclosure and one for the authorization—or alternatively, is one document with clear headers distinguishing the two sections
- Include a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act”
- A liability release or waiver
- A definition of at-will employment
- Any discussion of adverse action that could be taken based on the background report
- Requests for candidates to certify the accuracy of information provided or acknowledge other statements not directly required to authorize the background check
Of course, disclosure forms are not the only FCRA issues raising red flags in the courts. Asurint is also watching lawsuits related to the two-step Pre-Adverse and Adverse Action process. If you want to learn more, we addressed these and other issues in an educational webinar on FCRA compliance considerations. Watch the webinar on-demand now.