The latest big name company to find its name and reputation under fire for improperly using background checks probably should’ve known better.

The Credit Reporting Agency (CRA) it used to conduct its employee screening certainly should’ve known better.

Now, we’re all getting a lesson in Fair Credit Reporting Act (FCRA) and adverse action infringement because of them.

Let’s examine the case.

Genesis Healthcare (who, by the way just completed a $2.8 billion merger with Skilled Healthcare Group) is accused of rescinding a job offer to an occupational therapist after her background check came back with red flags.

So, what’s wrong with this?

Two things.

One, the woman claims that Genesis never provided her a copy of the background check or a statement of her rights, as mandated by the FCRA.

Two, the woman claims the background check incorrectly stated she had a previous felony conviction. She was convicted of a misdemeanor.

And, yup, you guessed it. She’s firing a lawsuit at the CRA – General Information Systems, Inc. – who conducted the erroneous background check.

The woman is seeking class action status and unspecified damages, and considering how tough the Equal Employment Opportunity Commission (EEOC) has been on companies violating the FCRA, chances are she’s going to walk away with a pretty penny.

Heres what Genesis shouldve done.

1.) Asked for written consent from the woman to perform a background check, including information from her credit report. By law, this consent must happen on a form separate from any other document associated with the hiring process. We don’t know if this happened or not from the original story documenting this case, but it’s the law and we thought you should know about it.

2.) Reported their findings. The law is pretty clear, here. There are specific reporting requirements associated with any information gathered from background checks. Beyond written consent, Genesis is legally bound per FCRA guidelines to provide applicants with copies of their background checks AND notify them of their rights before making a decision about their employment. In this woman’s case, she should’ve been given a copy of background check and made aware of the item giving Genesis pause (the felony). Any company MUST follow these same procedures before taking any adverse action (like rescinding a job offer) because of their concern with a screening report.

3.) Told the woman her rights. This woman had a legal right to know what her background check results were and why they were affecting Genesis’ job offer. This is called pre-adverse action. They should’ve also given the woman a Summary of Rights Under the FCRA which would’ve disclosed what actions she legally could take:

  • You must be told if information has been used against you.
  • You have the right to know what’s in your file.
  • You have the right to ask for a credit score.
  • You have the right to dispute incomplete or inaccurate information.
  • Consumer reporting agencies (background screening agencies are also called CRA’s) must correct or delete inaccurate, incomplete, or unverifiable information.
  • Consumer reporting agencies may not report outdated negative information.
  • Access to your file is limited.
  • You must give your consent for reports to be provided to employers.
  • You may limit “prescreened” offers of credit and insurance you get based on information in your credit report.
  • You may seek damages from violators.
  • Identity theft victims and active duty military personnel have additional rights.

4.) Advised her of the adverse action and given her this basic information:

  • Names, address, telephone number and other contact information of the Consumer Reporting Agency (screening agency) who has issued the report.
  • Statement saying the CRA was not the decision maker in the employment offer and that the CRA can’t explain why the adverse action is being taken.
  • Statement explaining the candidate’s right to get a free copy of the report from the CRA if requested within 60 days of the notice of adverse action.
  • Statement verifying the candidate’s right to dispute the information with the CRA and ask for corrections.

There does seem to be some discrepancy, at least among the people who commented on the story’s original post, about Texas law as it pertains to background checks. Read this.

Our thoughts, however, are that federal law trumps all and that’s why we follow it. FCRA is handed down from our national lawmakers so why would a state law take precedence? What do you think about the Genesis case and how it was handled? Send us your comments below.

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