There has been a significant increase in litigation against employers for alleged violations of the Fair Credit Reporting Act (FCRA), including a number of class action lawsuits. Now there are suits alleging employers did not provide pre-adverse action notice, or failed to wait a “reasonable” amount of time before taking adverse action by making a final decision not to hire someone.
The FCRA lays out specific requirements regarding adverse action and background screens. An employer uses a background screening service to run a background screen on an individual they would like to hire, but the background screen comes back with criminal records. What does the employer do? Before taking adverse action based on the screen, the employer must first notify the individual, either verbally or in writing, that records returned in the background screen may make them unsuitable for hire and identify those records. The employer must also provide the individual a copy of a document called A Summary of Your Rights Under the Fair Credit Reporting Act and a copy of the background screen.
If the applicant disputes accuracy or completeness of records from the background screen, the employer must keep the position open for a reasonable amount of time so the applicant can seek to correct the incorrect or incomplete records. According to an opinion letter from the Federal Trade Commission, five business days is a reasonable period of time for the employer to wait before taking adverse action. However, under certain circumstances, it may be argued that this time period should be extended.
After the employer takes adverse action, it must send a written Post-Adverse Action letter containing certain information. Employers who negligently fail to follow all the steps in the pre- and post-adverse action process are subject to civil litigation and may be held liable for the individual’s actual damages and attorney’s fees and costs. Employers found to have willfully violated the FCRA may be liable for additional amounts including statutory damages between $100 and $1,000 and punitive damages.
Background screening services are responsible for making sure the information on a background screen is accurate, matching at least two identifiers, and employers need to be diligent by following through with FCRA’s pre- and post-adverse action requirements. MSEC’s Pre-Employment Screening team can help.