Whoopsie. You made a big blunder.
John Doe gave you a great interview. You were impressed with his credentials, enjoyed his sense of humor, marveled at his intelligent answers. Heck, you even liked the confidence behind his handshake and eye contact.
You offered John the job. All but guaranteed him it was his. Even let him take a look at his would-be office.
Then you got John’s background report and you knew it wasn’t meant to be. Red flags appeared on his credit report and you’re not willing to take that kind of gamble with an employee.
Now you’re in a pickle and you don’t like the taste. What can you do?
As long as you’ve taken the legal and necessary steps to perform background checks during the hiring process, you should be okay. If you haven’t, you could end up like Whole Foods. Here’s what you need to know now to prevent that happening in the future.
Hopefully you asked John to sign off on his background check, including gathering information about his credit report. If you didn’t, you and the background screening agency may be in trouble with the Equal Employment Opportunity Commission (EEOC) and in violation of the Fair Credit Reporting Act (FCRA). The FCRA requires employers to disclose to candidates that they are intending to run a background check for employment purposes. By law, this must be consented to by the applicant in writing on a form separate from a job application. If you followed the letter of the law in getting John’s consent, good for you. You’re protected but you should still consult with your Human Resources department, or if you’re small enough where you don’t have one, you should seriously consider hiring an employment law attorney to help you over this speed bump.
You need to report your findings. You are bound by law to follow specific reporting requirements when it comes to requesting, filing and acting on information obtained in background checks. Aside from written consent from the applicant and to the screening agency, an employer must provide a candidate with a copy of their report AND notify them of their rights before taking any action. In John’s case, you must tell him that you ran his background check, give him a copy of its results, and inform him that you are concerned with some of its findings. You MUST do this before taking any ‘adverse action’ (ie. not hiring him or rescinding his job offer) based on the results. You should also make sure that you are not violating any federal or state equal opportunity laws by using information in the background check to make an employment decision with discriminatory tendencies.
Advise John of his rights. Before you can tell John “this just isn’t going to work out,” you need to follow FCRA guidelines and notify John about the screening results and how it is affecting your decision to offer him the job. This is called Pre-Adverse Action and it essentially allows John to see his background check, find out what information in there is cause for concern, and obtain a Summary of Rights Under the FCRA. This document explains to John what he is allowed to see and what actions he can take. The basic rights are as follows:
- 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.
Exercise Adverse Action. Investopedia defines ‘adverse action’ “as action that denies an individual or business credit, employment, insurance or other benefits. An adverse action is generally taken by a business or government based on a criminal past or information found in credit reports.”
If you’re going to take adverse action against John based on the findings in his background check, then you must give him this 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
It may be comforting to know that you don’t have to go it alone when it comes to navigating hiring/firing/adverse action decisions. Active Screening has a team of compliance experts ready to meet your demands, answer your questions and guide you through any regulatory changes. Our suite of software platforms can generate these forms and notices for you so can alleviate extra stresses that come with making employment decisions. Even better, our ACTivate platform can be seamlessly integrated with most existing Applicant Tracking Systems which helps to eliminate some human error that can occur during the hiring process (we’re talking to you who hired John Doe straight off the interview).