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Fair Credit Reporting Act: Understanding Your Rights in the Background Check Process

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No matter what business you are in, conducting a comprehensive background check that involves pre-employment drug screen, driving records check, previous employment job titles, professional license verification, education history, criminal records checks, criminal histories, arrest records, criminal conviction records, public records, civil lawsuits, credit score, other potential liability, and all other types of background check on all of your workers is necessary to ensure they are qualified and acceptable for their positions and help make sound hiring decisions.

A pre-employment verification can also protect your business from negligent hiring liability. You must, however, understand how the FCRA applies to background checks for employment. If you carry out compliant background check reports following the FCRA, you could avoid putting your business at risk of litigation.

You can defend your business by outsourcing your pre-employment background check to a third-party background check company that complies with the FCRA, like EBS Colorado. This will aid in hiring suitable personnel and shield you from adverse action process, and other legal actions during the on-boarding process.

For many small to medium-sized firms in various industries, including transportation, healthcare, and finance, we do relevant background checks that are FCRA-compliant for employment purposes. You will gain a better understanding of your legal responsibilities as an employer thanks to this comprehensive guide. Read on.

What is the FCRA?

A federal law known as the Fair Credit Reporting Act (FCRA) was adopted by Congress in 1970. The FCRA was enacted in 1970 in response to a burgeoning market for “consumer reports” and “investigative reports” on people. The FCRA is the first federal law to govern how personal data from private companies is used.

Since it was first passed, the FCRA has undergone several revisions, allowing it to broaden its application. The FCRA regulates consumer reporting agencies (CRAs), which include credit checks by credit bureaus and background-checking businesses.

The FTC issues regulations under the FCRA and carries out its enforcement.

The FCRA provides consumers with several rights, including:

  • Before a background check for employment, you have the right to informed consent.
  • You have the right to evaluate and correct mistakes in background checks.
  • The right to be informed if data from a background investigation undertaken before employment is used to influence negatively.
  • Right, to file an appeal if they believe the information utilized to make the decision was erroneous and the decision was made inadvertently based on information from their pre-employment background check.

If you are a business owner of a small and medium-sized business based in Colorado, you should hire a reputable provider of background screening services. Employment Background Screening of Colorado has an expert team of professionals who are trained comprehensively in full background screening of your employees. We are confident that our access to databases for gathering, preserving, and discarding the personal information of your prospective candidates will completely comply with the FCRA.

Why Are Employers Required to Comply with the FCRA?

Violations of the FCRA can have serious consequences. Prospective Employers must adhere to specified procedures when obtaining background checks from outside sources throughout the initial employment process. FCRA compliant background check programs provide guidance to employers. 

Private Employers are often sued with substantial penalties by the federal government agencies and law enforcement agencies for alleged failures in following the FCRA. According to the Society for Human Resources Management, since 2009, there has been a significant increase of different offense level in FCRA complaints.

Background checks for employers involved in FCRA lawsuits suffer financial losses due to legal bills, lost productivity, reputational harm, settlements, and interruptions to business operations. Due to the plaintiffs' remedies, FCRA lawsuits can be costly. If plaintiffs prevail in FCRA lawsuits, they may be entitled to punitive penalties, actual damages, failed federal contracts, and legal and attorney's fees.

Since many organizations use the same forms and procedures for background checks, one employer may break several laws. Many of these claims have a significant risk of loss for public employers because they are frequently brought as class actions.

Conducting FCRA-compliant checks can help qualified candidates and prospective employees form a clear picture of the organization and defend the employer from responsibility.

By using an FCRA compliance screening procedure, you demonstrate that you are conscious of your duties and the rights and privacy of your job applicants.

Check Pricing For an Applicant Credit History Screening Report

How to avoid FCRA violations

It's simple to avoid FCRA infractions when you have the appropriate policies and procedures and engage with a background check business for credit report verification that complies with the FCRA, like EBS Colorado.

You should evaluate such policies or procedures with legal counsel and your human resources department before implementing them.

Here are some pointers for avoiding FCRA violations.

  • Provide FCRA-compliant notices and get written consent: Ensure you give written notice and obtain permission from the applicant before running a background check on them. Ensure that the disclosure is provided as a separate, non-combined document.
  • The consent form might be authorized to be disclosed under the FCRA: However, you cannot enclose any additional documents with this one. This includes liability waivers and NDAs.
  • Give the applicant a pre-adverse notice if you intend to make a negative employment decision based on information from the background report: The applicant must be informed of your plans to reject them and provide a copy of the background check results. Five days must pass before the potential employee can question or change the information. Send a copy of their FCRA rights summary to them.
  • Send a notice to the applicant if you have made a final adverse employment decision: Send an adverse employment notification along with contact details for the CRA who provided the report after your decision has been made. The trustworthy employees need to be made aware that the CRA made a choice and cannot respond to inquiries. The notice should advise the applicant that they have the right to question the accuracy of the information in the CRA report and that, within 60 days of receiving the adverse action notification, they may request a free CRA report.

If you want to check credit history of your applicants, EBS Colorado is the best company to hire for all types of background checks. We are FCRA compliant and can help you ensure that any reports obtained follow all applicable local, national, and international legislation.

Run Your First Credit History Background Check Now by Signing Up to EBS Colorado

EBS Colorado – Your trusted partner for fast, accurate, and compliant pre-employment background checks

Any hiring process should include comprehensive pre-employment background check services on applicants; compliant with the FCRA and other background check laws. When working with a reliable background check provider like EBS Colorado, you can be guaranteed that the information you receive complies with all local and state laws, and federal agency.

Our personnel have received thorough training to carry out FCRA-compliant background screening processes. We give you the details you require to make a wise hiring choice and avoid negligent hiring claims. We can find the data you require using the most recent technology used for individual assessment. We generally submit all the reports in 2 business days. To learn more about pre-employment screenings and our compliance with the FCRA and other laws, contact EBS Colorado.

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