No one disputes that background checks for employment applicants are necessary. Background checks are just a part of an overall, comprehensive onboarding process an employer should use to ultimately find the most qualified person to work with the company. Auto dealerships in particular understand the vital importance of selecting the best applicant and reducing employee turnover.
Part of the background screening process involves several important steps an employer must do. First and foremost, in order for the employer to conduct a background check the applicant must provide his/her permission in writing. Per the federal Fair Credit Reporting Act (FCRA), the applicant must sign an authorization form giving permission for the prospective employer to use a third-party vendor, i.e. background screening company, to conduct a search. Secondly, the applicant must be provided a disclosure of what the employer will be searching for. Finally, the authorization form must be a separate and stand-alone document, not part of an employment application. It is strongly suggested that the authorization form and the disclosure form be two separate documents.
Once the screening report comes back from the vendor, if there is derogatory information on the individual’s background report, either in whole or in part, and the employer is considering making an adverse hiring decision based on that information, the employer must notify the applicant, in writing, via a “Pre-Adverse Action” letter. The letter explains to the applicant you are considering information on the report that could negatively affect their chance of being hired.
The letter is accompanied with the actual screening report, along with the applicant’s Summary of Rights per the FCRA. The letter also directs the applicant to contact the respective background screening company to dispute the record. The screening company must start to investigate the dispute within five days of receiving the dispute and must conclude its investigation within 30 days of receiving the dispute.
The applicant receiving a “Pre-Adverse Action” letter has a “reasonable” amount of time to review the report and determine if there are any errors and allows the applicant time to dispute the results. The “reasonable” amount of time to review and dispute the record is not defined in the FCRA, but the rule of thumb is seven to 10 business days. If the employer does not hear back from the applicant within the previously mentioned time frame, the employer must then send an “Adverse Action” letter to the applicant explaining their application for employment has been denied due to the results of the background screening report.
Adhering to these relatively simple mandates per the FCRA is easy. However, there are employers who fail to follow the law, which then opens the door for civil litigation that could have been easily avoided.
Dealers are advised to review this information with their corporate attorney before taking any action based on this article.
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