February 28, 2018

Is Your Background Screening Program Compliant?

Compliant Background Screening Program

Today, employers are navigating complex waters when it comes to creating a compliant background screening program. Screening is necessary to assess prospective team members, understand risk and exposure, and to make good hiring decisions.

Here are some important compliance standards to keep in mind when navigating Fair Credit  Reporting Act regulations.

First steps for compliant background screening

The FCRA requires the following of any background check run for employment purposes[1]:

  1. a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and 
  2. the consumer has authorized in writing (which authorization may be made on the document referred to in clause i.) the procurement of the report by that person.

The implications

Clear and conspicuous disclosure – Your disclosure language should be easy to understand and written at a reading level of your average applicant – free from complex legalese. It should stand out—position your background paperwork at the forefront of an application packet. You want the applicant to be fully aware they are filling out paperwork for a background check.

In writing – You are required to have a written form. You cannot make your disclosure over the phone or in conversation.

Before the report is procured – You must make your disclosure before you obtain the background check.

In a document that consists solely of the disclosure – * Key Provision * This is where most problems occur. You cannot put anything other than the disclosure language on this form. No special sections labeled, “For administrative purposes only”; no waiver of rights; no questions about previous arrests or convictions; no other information! Given the litigation around this particular issue, we recommend that you do not combine the disclosure and authorization statements even though that appears to be authorized in section (ii) above. There is statutory liability for violating this provision – it’s nearly automatic. Every person to whom the non-compliant form has been given is a potential class member for a lawsuit. Even if your organization is small to medium sized, consider the potential dollar amount of the statutory fine that may accumulate if you are non-compliant.

Authorized in writing – Your applicant must sign something authorizing the background check.  As stated above, the authorization is best kept on a separate form. You can include other information on this form but be careful. Many organizations attempt to put broad waivers of rights on these forms.  Applicants cannot waive their rights under the FCRA. Be cautious when including disclaimers on your authorization forms.

What about Volunteers?

According to the Federal Trade Commission background screening conducted on volunteers is subject to the same rules as employment screening. The justification for this statement is not found directly within the language of the FCRA, but rather in a document titled, “40 Years of Experience with the Fair Credit Reporting Act – An FTC Staff Report with Summary of Interpretations” which came out in 2011. The document addresses the issue of volunteer screening by defining:

 “employment purposes” to mean when a report is “used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.”  

Because the term “employment purposes” is interpreted liberally to effectuate the broad remedial purpose of the FCRA, it may apply to situations where an entity uses individuals who are not technically employees to perform duties.

The clause goes on to cite the hypothetical situation of organizations who utilize volunteers[2]. What is the impact of that interpretation? It means that your obligations for volunteer screening are the same as those for employment screening.  

Mastering the fundamental processes involved in hiring pays off in the form of organizational resilience. Start off on the right foot with employee screening, understand the implications for how to approach the process, and don’t forget to include volunteers.


[1] §604(b)(2) of the FCRA

[2] Section 603(h)