L ABOR & EMPLOYMENT
Things You Should Know About Background Checks By LESTER S. ROSEN
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f you are a general counsel, the topic of background checks may cross your desk. This can occur when an employer contracts with a background screening provider, also called a Consumer Reporting Agency (CRA). You may be asked to review the agreement and forms. You may also be asked to audit a screening and hiring program for legal compliance, as well as whether it affords sufficient due diligence. You may need to deal with an issue immediately, such as a candidate with a criminal record, an act of dishonesty or violence, or even a threatened lawsuit for negligent hiring.
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Background screening is subject to legislation, litigation and regulation. Here are 15 things general counsel need to know about background checks: • When counsel reviews an agreement between an employer and a CRA, there will typically be boilerplate about background checks and the responsibilities of the parties under the Fair Credit Reporting Act (FCRA). Counsel should communicate with the CRA to review which language is considered mandatory under the FCRA before suggesting changes.
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• Class action lawsuits against employers for alleged violations of the FCRA have skyrocketed, many based upon allegations of technical violations of the forms used to initiate a background report. For example, the FCRA requires that an applicant receive a “standalone” disclosure form that a background check will be run. You should make sure the forms are “standalone.” • Although background checks have a high rate of accuracy, the process can never be perfect. Information obtained by a CRA comes from third parties, and a CRA cannot agree to terms making them responsible for the accuracy of data. The FCRA requires a CRA to use “reasonable procedures for maximum possible accuracy.” • You may be tempted to broaden the liability language in the event a new hire turns out to be a bad decision. However, a CRA does not make hiring decisions, and a background check occurs after the employer has made the decision to hire. Any attempt to impose strict liability, consequential damage or punitive damages is not likely to be accepted by a bona fide screening firm. • Most employers want the hiring process to proceed swiftly. You may request a Service Level BACK TO CONTENTS
