Protecting Your Staffing Firm Against FCRA Lawsuits
Our leadership team recently made their way to sunny San Diego for the 2017 Staffing Industry Analysts Executive Forum. There, we met up with a handful of our existing clients, as well as many CEOs, owners and other leaders from staffing firms across the nation and across industry sectors. We also had the opportunity to lead a presentation: How Executives Can Protect their Company from Lawsuits. If you didn’t have a chance to attend our seminar, keep reading for some of the highlights.
How to Protect Your Company from FCRA Lawsuits
As a background screening company, we’ve noticed a significant trend in the rise of lawsuits pertaining to non-compliant background screening practices. You’ve likely heard about some of the big ones, with class action lawsuits against companies like Disney, Whole Foods, and Amazon. But it’s not just the big names that are being hit. There have been over 400 reported class action lawsuits of this kind, resulting in multi-million dollar settlements.
Unfortunately, staffing firms are an easy target for these lawsuits; they have large pools of candidates who have had to go through background checks, and the processes staffing firms have in place aren’t always risk-free. To ensure full compliance, employers need to have a thorough understanding of the following areas.
Disclosure & Authorization
First, it’s extremely important for staffing firms to fully understand the rules and regulations surrounding FCRA disclosure. Disclosure must be “clear and conspicuous” and stand alone and separate from the rest of the application. Many firms mistakenly include it directly on the application or combine it with additional language, such as a release of liability, at-will status, or an agreement to arbitration. Neither of these practices are compliant. In addition, firms must obtain a candidate’s written authorization before running a background check; although this form can technically be combined with the disclosure statement (as long as it is only these two), it is best practice to keep the two separate.
Should you decide to rescind a job offer after viewing the results of the report, you must provide the candidate with a written pre-adverse action notification, along with a summary of their consumer rights and copy of the background report. After providing a reasonable amount of time (at least ten business days) for the candidate to dispute the report, an official adverse action notification is required in writing to affirm the decision to not hire, along with a copy of the report and summary of rights.
These processes sound simple enough, but there are enough reported violations to suggest they’re not as easy in practice. Some companies simply aren’t aware of the nitty-gritty technicalities. Others have “too many cooks in the kitchen,” and the process becomes weaker as more people are involved or information transfer to new staff is incomplete or faulty. The key is to educate your HR staff and recruiters about the specifics of what is and is not acceptable with regard to the background screening process.
At easyBackgrounds, we are your advocate. We ensure that our clients’ background screening process is compliant with FCRA regulations, so they can gain peace of mind.