FTC Tells Employers to Keep FCRA Required Disclosures Simple for Background Screening Reports on Job Applicants

FTC Blog about Background Screening Disclosures

Written By ESR News Blog Editor Thomas Ahearn

The Federal Trade Commission (FTC) has published a blog entitled “Background checks on prospective employees: Keep required disclosures simple” to help employers understand requirements of the Fair Credit Reporting Act (FCRA) when procuring background screening reports on job applicants from third party screeners.

If your company gets background information on prospective employees, it’s likely you’re covered by the Fair Credit Reporting Act. Before you get a background screening report, the law requires that you make certain disclosures and get a prospective employee’s authorization. Is it time for a FCRA compliance check?

The FTC blog explains background screening reports are “consumer reports” under the FCRA when they factor in determining eligibility for employment and other purposes and include information about a consumer’s credit, character, reputation, personal characteristics, or mode of living. Companies must take steps under the FCRA:

  • Before you get a background screening report about a prospective employee, disclose to the person that you intend to get the report and then get their written authorization allowing you to do that.
  • If the background screening report reveals something that may cause you to decide not to hire the person, you must notify them of the results of the report and provide them with a copy. Next, you have to give them sufficient time to review the report so they can challenge any elements that might be incorrect.
  • If you ultimately decide not to hire someone based in whole or in part on the contents of a background screening report, you must provide a notice to that person that states they weren’t hired due at least in part to the result of the background screening report.

Under the FCRA, a federal law governing background checks, the FTC tells employers to provide applicants “with a clear and conspicuous written disclosure that you plan to get a background screening report about them and you must get the person’s written authorization that gives you their permission to compile the report.”

While the FTC allows employers to put the required disclosure and a request for authorization in one document, some companies “trip themselves up by using complicated legal jargon or adding extra acknowledgements or waivers.” Here are examples of what should not be in a simple disclosure:

  • 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.

The FTC warns extra verbiage in disclosures “not only makes it harder for the prospective employee to understand the main purpose of the document, but it also may violate the FCRA. Adding other acknowledgements or releases of liability is beyond the scope of what the FCRA permits in this document.”

The FTC concludes: Just include a simple, easy-to-understand notification that you will obtain a background screening report, perhaps with a simple explanation of what information will be included in the report. The request for the prospective employee’s authorization should be in plain language, too.

As reported by ESR News in February 2017, an FTC blog entitled ‘Background checks? Don’t double dip.’ reminded users who receive information from screeners that compile consumer reports must comply with the FCRA and not “double-dip” and get a report for one purpose but use if for a different purpose.

ESR Helps Employers Comply with FTC and FCRA

Employment Screening Resources® (ESR) offers employers two complimentary whitepapers entitled ‘Common Ways Consumer Reporting Agencies are Sued Under the FCRA’ and ‘Common Ways Prospective or Current Employees Sue Employers Under the FCRA.’ To learn more about ESR, please visit www.esrcheck.com.

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