Employers often conduct background checks when hiring a new employee or considering an employee for promotion, but they don’t always realize that the Fair Credit Reporting Act (FCRA) has strict requirements they must follow.
This law applies to both large and small employers, and even applies to individuals hiring a single employee.
An employer who violates FCRA may be required to pay the employee/applicant’s actual damages or, if higher, statutory damages ranging from $100-$1,000.
If the violation is willful, the employer may also be ordered to pay punitive damages as well as the employee/applicant’s attorneys’ fees.
One of FCRA’s requirements is that the employer must provide the employee/applicant with a disclosure form before conducting a background check.
The disclosure should be a stand-alone document, not buried in a job application. Nor should additional language, such as a release of liability, be added to the disclosure.
After an employer obtains a background check report, the employer must follow certain requirements if it intends to take “adverse action” against the employee/applicant based on the contents of the report.
The employer will need to give the employee/applicant a “pre-adverse action” notice, and, when taking the adverse action, the employer must also provide the applicant/employee with an adverse action notice. Both of these notices must contain certain required information.
More information for employers desiring to conduct background checks is available from the FTC.
This issue is not only important to employers but, if you, as an applicant or employee feel that your rights have been violated, you may wish to review the FTC video describing your rights.
In some situations, the use of background checks may be considered unlawful discrimination. The EEOC has issued guidelines to help employers prevent criminal background checks from having a disparate impact based on protected classes, such as race and national origin.
State laws and local ordinances may also affect an employer’s right to run a background check on an employee or applicant.
For example, more than half the states, including Oregon and Washington, have Ban-the-Box statutes regulating criminal background checks as well as imposing restrictions on when and how employers can ask about a criminal record. A number of cities and counties have their own Ban-the-Box regulations.
Several states (including Oregon and Washington) and cities prohibit employers from running credit checks on employees except in certain limited situations.
Please feel free to contact us if you have any questions about FCRA, Ban-the-Box statutes, or background checks.
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