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A Comprehensive Review of Screening Compliance

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In the world of background checks, compliance is a must. It’s simply a fact of life for both Consumer Reporting Agencies (CRAs) and any organization or business that screens consumers. A nuanced topic though it may be, this article sheds light on the industry-, permissible purpose-, and location-specific requirements that may apply to you. Of course, this article is only a starting point for ensuring your organization complies with background screening laws; consider discussing further with your legal counsel.

Below, we’ve broken down the most important factors to allow you to hone in on what’s relevant to your organization.

Rules & Regulations

Background screening compliance is a joint effort between the CRA who provides the report, the furnishers of data that end up in some reports, and the end user who procures the report. Different regulations and obligations apply to each type of entity, and two federal agencies—the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB)—are charged with enforcing them.

Background screening companies can also become accredited by the Professional Background Screening Association’s (PBSA’s) Background Screening Agency Accreditation Program (BSAAP). In short, accredited CRAs like us are committed to excellence and delivering the highest level of standards in six critical areas through accountability and continuous improvement of policies and procedures. For more information about this designation and the process of achieving it, check out our PBSA Accreditation page.

Of course, every business is part of an industry—some of which have specific requirements regarding background checks and additional searches (credit history, social media, USDOT, etc.). Organizations in education, finance, healthcare, or transportation (to name a few) need to adhere to specific constraints regarding hiring and continued employment practices. If you have questions about the specifics of your industry, check with your legal counsel.

End User Responsibilities

When working with an accredited background check company, companies must agree to several policies as end users. These may include, but are not limited to:

  • Reports won’t be used to violate the law
  • Consent has been given by applicants
  • Reports will be used confidentially
  • You won’t sell or disclose information to a third party
  • Applicant identities are confirmed

Further, a permissible purpose must be present to run a background check. Most often this is a Written Instruction for site access or personal screening, a Legitimate Business Need like tenant screening, or for Employment such as hiring, promotion, or retention. No matter the purpose, the organization must first be credentialed before they’re allowed to order a report. Most often, this process involves verifying business information, licenses, and tax documents; it may occasionally require an on-site inspection as well.

State-Specific Legislations

Among the myriad of laws and regulations are two that have been taking the country by storm in recent years: Clean Slate and Ban the Box laws. Essentially, these are legislations passed by individual states to limit the amount of information employers can use to deny individuals employment based on criminal history. The former removes eligible offenses from an individual’s criminal record once they’ve completed their sentence and any post-sentence requirements such as parole or probation and have committed any re-offenses. The latter provides certain procedures regarding criminal history inquiries during the application process and, in some cases, limits employers from asking about criminal history on job applications altogether.

To learn more about these measures and if/how they affect your state, read our previous coverage on these subjects here:

Ban the Box Updates: What Employers Need to Know

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Clean Slate Laws: What Employers Need to Know

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Additional Obligations

Accompanying the larger regulations at play are additional necessary forms and procedures. Each carries its own significance and it’s important not to neglect them:

Disclosure & Authorization forms ensure applicants consent to being screened. All candidates must complete this form either on paper or electronically, it must be up to date, and it must include what will and may be searched.

Adverse Action means rescinding a job offer due to the results of a background check. This is a two-step process where a letter is sent to the applicant in advance to give them time to review the accuracy and completeness of their report and a chance to dispute inaccuracies.

If a prospective hire chooses to dispute information on their report, the CRA is required to perform a re-investigation and notify the furnishers of the data in question. Both the end user and applicant will be notified of the results of said re-investigation.

In summary, compliance should always be top of mind. Your organization needs to adhere to state and industry regulations, be properly credentialed, follow agreed-upon policies and procedures, and provide candidates with the tools they need to ensure their report is accurate.

For questions related to industry-specific standards, consult your legal adviser. For additional information, check out the Society for Human Resource Management’s website or our archive of compliance coverage.

What To Do Before You Run an Employee Background Check

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Established companies and new businesses alike must manage workplace safety and avoid fraud to stay secure. Background checks offer protection and peace of mind as you bring new people into your organization. However, developing an effective screening system to run an employee background check is sometimes easier said than done. Regardless of where your organization is in its development, it’s worthwhile to reflect on your background screening practices.

In order to help your company reap the benefits of background screenings while staying compliant with consumer protection laws, make sure you complete the following before screening applicants.

Create a consistent screening policy

Work with your HR department to build a comprehensive hiring process that includes your background check procedures. You can create a flow chart of the proper steps to take and how to proceed in different situations.

Vague background check practices may cause your hiring team to treat applicants’ reports differently, which can lead to legal trouble. To stay consistent with the Fair Credit Reporting Act (FCRA), you must follow a strict process when taking adverse action—the removal of applicants from consideration because of their background report. So, if that process is already in your procedure, your hiring team will respond correctly.

Hire an FCRA-compliant, PBSA-certified credit reporting agency

The FCRA determines proper background check practices, and you must follow its guidelines to protect your business from negligent hiring charges. According to the FCRA, you need written consent from anyone you want to screen. And you have to explain your reasoning if you take adverse action. Under the FCRA, applicants have the right to know what information is in their report and they can dispute anything they deem incorrect.

Compliance is crucial, and the best way to guarantee a legal hiring process is to hire a reputable screening agency. Hence, the best agencies are FCRA experts that help you navigate its requirements with ease.

The Professional Background Screening Association (PBSA) determines the ethical and performance standards for the screening industry. So, if a consumer reporting agency has PBSA approval, it meets ethical standards and can be considered a trustworthy company.

See from the perspective of your applicants

Background checks are an increasingly common part of job searches. Applicants likely complete a screening for every job they apply for, and the FCRA empowers them to take an active role in the process. Your candidates will be familiar with the screening process and may have questions you should be prepared to answer.

Make sure your applicants feel comfortable asking questions, voicing concerns, seeking clarification and viewing their results upon request. Therefore, by preparing yourself to meet applicants’ needs, you’ll help them build trust with your organization and expedite the hiring process.

That’s the first steps in learning how to run an employee background check. Learn more about employment screening and how you can improve your hiring process by contacting the One Source Client Relations Team.