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Are Your Hiring Practices FCRA Compliant?
6 mins read

January 15, 2019 – If you work in the transportation industry, then you’re no stranger to compliance. From random drug testing programs to hours of service limits, trucking companies and drivers have no shortage of regulations they must adhere to.

But if you hire drivers – and run background checks on them – you need to be thinking about more than just DOT compliance. You need to be thinking about FCRA compliance, too.

The Fair Credit Reporting Act (FCRA) was established in 1970 to ensure the “fairness, accuracy and privacy of consumer information” that is collected and stored by consumer reporting agencies. For employers, it dictates a few very important steps that must be followed throughout the background screening process. As some very high-profile cases show us, a failure to follow even one of these steps can lead to substantial fines.

One large carrier settled a $4.4 million class-action lawsuit for claims that they didn’t adhere to FCRA-compliant hiring practices. Specifically, the lawsuit alleged that they failed to provide the required disclosures prior to running pre-employment background screens. A plaintiff in the case also claimed that they didn’t get their permission before running a background check – or follow adverse action procedures when they decided to use the information contained in the report to make a hiring decision.

Another carrier settled for $870,000 when it was alleged that they didn’t get permission before running background checks on applicants. In this case also, plaintiffs claimed that adverse action was taken against applicants without sending the required pre-adverse action notice.

These two high-profile incidents are just a few of the many FCRA litigation claims that are filed each year – and studies show that the number of cases is going up. With more and more companies getting caught up in expensive lawsuits for noncompliant background screening practices, how can you avoid having this happen to you?

Here are the steps you must take each time you run a background check to stay compliant with FCRA regulations:

  • Provide the Required Disclosure: You must disclose your clear intent (in writing) to run a background check for pre-employment purposes. The “clear intent” is important here – if it’s written in fine print on the bottom of the job application, that isn’t going to cut it. To protect your company, make sure it’s presented as a separate document that is easy to understand.
  • Get Authorization First: Before you move forward, you must get permission from the applicant or employee who you’re running the background check on. This applies even in the case of background screens that are required by the FMCSA (such as the annual MVR requirement).
  • Send a Pre-Adverse Action Notice: If you plan on taking negative action against the applicant or employee based on information you discovered in the background check, you must send written notice to the individual. This notice must inform them of their right to obtain a free copy of their report – as well as to dispute any inaccurate information they find within it. You must also send them a copy of the FCRA Summary of Rights.
  • Allow Time for the Dispute Process: Before you can actually take adverse action against the individual, you must wait a “reasonable amount of time” so that they have the ability to review their report and dispute any inaccurate information. Although the FCRA doesn’t specify what this length of time is, many carriers give 8-10 days before moving forward in the process.
  • Send an Adverse Action Notice: Once you’ve given the individual adequate time to dispute information in the report, you can go ahead and send an adverse action notice that informs them that they are no longer being considered for employment. In this notice, you must include the name and contact information of the vendor you used to run the report. You must also include a statement explaining that the background check vendor isn’t responsible for your employment decision – nor can they talk to the reasoning behind the employment decision you made.

And even though these federal FCRA regulations are critical, they aren’t the only regulations you need to understand – many states have their own FCRA regulations that must be adhered to, as well.

If you have questions about the rules for running background checks in your state – or want to work with a professional who can manage the entire process compliantly – call (860) 815-0764 or click here for more information.

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