Some Best Practices for Implementing FCRA Compliant Background Checks for Contractor Networks

Background Screening | May 9, 2022

While conducting screenings for contractors, there are some very important steps to follow to ensure these are Fair Credit Reporting Act (FCRA) compliant background checks. Make sure your organization knows what is required…and then meets those expectations. 

First enacted in 1970, the FCRA is comprehensive federal legislation to regulate the collection, dissemination, and use of consumer information, which is the information contained in a background check report. This legislation governs the process that your organization, called an end-user under the FCRA, and a screening partner, called a consumer reporting agency, must follow. 

There are certain requirements that must be met during the screening to ensure compliance which, if not followed can cause operational and financial liabilities for your organization. This article will focus on some of these and why they are important for FCRA compliant background checks. NOTE – other obligations, certifications, and processes exist in the screening process. 

Disclose the nature and scope of the searches to be completed in a single document that is “clear and conspicuous” and provided to the consumer before any consumer report being requested

• • Whenever a consumer report, or background check, is requested, it must be done with full disclosure to the individual about whom the report is being obtained. In order for the individual to fully understand the disclosure, it must be written in plain language and be straightforward – this is what “clear and conspicuous” means. Any additional language in the disclosure, or failure to make these disclosures, are common errors made in the background check process and the costs can be notable.
• Taafua-v.-QGT-Settlement-Approval.pdf (consumerfinancialserviceslawmonitor.com)
• Ninth Circuit Holds Employers May Provide a Standalone Background Check Disclosure Concurrently With Other Documents | Littler Mendelson P.C.
• https://casetext.com/case/walker-v-fred-meyer-inc-2

Consent and authorization by consumers must be provided in writing and BEFORE the request is made

• • In line with the disclosure, the consent and authorization ensure the individual upon whom the background check is being conducted has agreed to, and understands, the process that is being put through. They must know the reason for the search, and the purpose for which the searches are being done. Since the information obtained in the background check will be used to make a decision on the individual, if they deny knowing the searches were being done, or claim they did not consent to them, the organization could be liable. 
• https://case-law.vlex.com/vid/domante-v-dish-networks-768411021

Maintain accuracy of reporting

• • Once the various search requests are determined, the information used to conduct them, specifically name(s), date of birth, and address information, must be accurate. If that information is incomplete, or inaccurate in any way, it will really compromise the results. Once the results of various searches, like criminal, driving, employment, or even sex offender checks, are returned. This initial demographic information will be very important to determine if the record belongs to the individual contractor and if the information can be reported and then used to make decisions about them. In cases where the information is not accurate, it may be incorrectly matched to the contractor and cause adverse conditions for them. If an organization does this based on incorrect information, the costs could be notable – both financially and reputationally. 
• https://casetext.com/case/williams-v-first-advantage-lns-screening-solutions-inc-2
• https://unicourt.com/case/pc-ap1-keith-erickson-v-first-advantage-background-ser-14479

Follow the Adverse Action Process, which includes A Summary of Rights, an opportunity to dispute information, and a copy of their report.

When the information in a background check will create an adverse impact on the individual being screened, there is a prescribed process that must be followed to notify the contractor, advise them of their rights and provide them with an opportunity to dispute the findings in the report, before a final decision about them is made.

If prior steps in the process, such as the provision of the disclosure and obtaining the consent and authorization of the individual, have been completed, the notification of adverse action should not be a surprise to the individual. In some cases, however, this may be the first time an individual contractor realizes that a background check was run on them and that they are going to be impacted by the results. 

This process is a deliberate step to ensure the contractor has a voice in the process and is aware of the information being used to make decisions about them. Further, if the information is incorrect or incomplete in any way, they have the opportunity to correct it, or work with the organization to correct it, before a final determination about them is conducted. Failure to complete this step in the process can be considered one of the most egregious errors when considering FCRA compliance. 

• Hale v. Lowe’s Companies, Inc. – 5:22-cv-00013 (classaction.org)
• https://casetext.com/case/davis-v-cd-sec-mgmt-inc

As noted, these are not all the requirements or best practices for implementing FCRA compliant background checks but they are certainly among the most important. Failing to understand your role as a user of background checks, or neglecting to follow the requirements of that role, can be costly for your organization and create both financial and legal liability that can easily be avoided. It may seem easy but it continues to be remarkable how many organizations get this wrong and end up out of compliance with a process that really has not changed for over 50 years. Make sure your organization is not one of them!

Contents are provided for information purposes only and should not be construed as legal advice. Users are reminded to seek legal counsel with respect to their obligations and use of PlusOne Solutions services.

About PlusOne Solutions

PlusOne Solutions has been an industry leader in the risk management field by specializing in compliance programs that meet the complex challenges of geographically dispersed contractors, vendors, and employee networks. PlusOne Solutions protects companies from possible financial, legal, and reputational risks associated with contractor and vendor relationships while creating safer work environments. To learn more, visit https://www.PlusOneSolutions.net.