The Fair Credit Reporting Act (FCRA) requires that Employers who use background screening reports to make employment decisions provide a written disclosure to applicants that their background information will be obtained for employment purposes. Furthermore, the FCRA requires that employers also receive written authorization before a background check can be conducted.
In terms of the disclosure and authorization requirements found in Section 604 of the FCRA, the employer cannot procure a consumer report for employment purposes unless a “clear and conspicuous disclosure has been made in writing to the consumer” before requesting the consumer report “in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes.” The consumer must also authorize in writing the procurement of the consumer report. The disclosure and authorization may appear on the same document.
The term “solely” is one word currently being exploited by plaintiffs’ attorneys who are aggressively pursuing class action lawsuits against private employers. One recent $6.8 million settlement with a national grocery chain involved allegations that the employer’s inclusion of a waiver of liability in its disclosure language violated the “solely” requirement of the FCRA. Other cases have alleged the inclusion of criminal history questions or other extraneous information also violates the FCRA requirements. Thus, given the litigious nature of the disclosure and authorization requirements, consultation with qualified legal counsel is highly recommended.
Employers may have additional disclosure and authorization requirements under applicable state laws.
Below are some best-practice guidelines regarding disclosure and authorization forms compiled by industry experts as well as the Federal Trade Commission (FTC) and recent court decisions:
- Don’t include language that claims to release you from liability for conducting, obtaining, or using the background screening report.
- Don’t include a certification by the prospective employee that all information in his or her job application is accurate.
- Delete any wording that purports to require the prospective employee to acknowledge that your hiring decisions are based on legitimate non-discriminatory reasons.
- Get rid of overly broad authorizations that permit the release of information that the FCRA doesn’t allow to be included in a background screening report – for example, bankruptcies that are more than 10 years old. · Best practice suggests that the disclosure be kept separate from the authorization form by having separate documents for each.
- Use stand-alone documents. Do not include the disclosure and authorization forms in employment applications, or documents that contain information on other topics. Do not include information related to any other topic, such as benefit information, etc., in the disclosure or authorization forms.
- Ensure that the disclosure and authorization are clear and conspicuous. Plain language and legible fonts are best to ensure that prospective employees are able to understand the information. Do not use fine print, or small, or illegible type.
- Include the name of the company that will be preparing the background report (the CRA). Include the CRA’s contact information, such as address, toll-free telephone number and website.
- Reference the “Summary of Your Rights Under the Fair Credit Reporting Act” document in the acknowledgement form and provide the document separately.
- Clearly define the scope of the background report. Disclose each type of information that will be included in the report, such as work and education history, criminal history, etc.
- Have the employee acknowledge receipt of both the disclosure and authorization by requiring a signature on each form.
- Ensure compliance with state-specific requirements regarding disclosures and authorizations and use a separate form to provide state-required notices.
- Do not include statements regarding the consumer's rights to find out more regarding the "nature and scope" of the investigative consumer report or their right to access the screening company's files (also known as a "copy request").
While the above information can be helpful in assisting you with creating your own disclosure and authorization forms, always check with your legal counsel to ensure that you are accurately following all regulations and meeting all applicable requirements.