Compliance News

Compliance 101

Background checks are absolutely essential for staffing and recruiting companies—after all, you’re not just responsible for the people you hire for your own business, but for clients’ hires, too. However, in the rush to get the best candidate hired quickly, you may be opening yourself up to a major risk: Not staying compliant.

The Fair Credit Reporting Act (FCRA) is a federal law that regulates how reporting agencies can use information. Along with many other laws on state and local levels, the FCRA is used to protect employees against unfair hiring practices. It dictates that job candidates must give consent for reports to be provided to a potential employer. Candidates must also be told if information reported is used against them and that they have the right to request and obtain the information, among other things.


The bad news: Failing to send proper notifications per FCRA can result in statutory damages of $1,000 per violation. In addition, the court may determine what punitive damages it will allow as well as court and attorney’s fees the candidate can recover.


The good news: Approved Hire is backed by more than 20 years of experience keeping companies compliant at every stage of the hiring process, even as laws rapidly change. Our system is designed with compliance in mind. Applicants can remotely complete all FCRA releases, and in the event you find information that negatively impacts your decision, it’s easy to properly inform them with our pre-adverse and adverse action forms.


So how do you make sure you’re abiding by FCRA guidelines beyond using Approved Hire for your screenings?


  1. Create a written screening policy

Before starting a background screening with a credit reporting agency, get written authorization from the candidate and make sure they know the results may be used as a basis for employment decisions.


  1. Turn to a trusted partner

All screenings are not created equally. At Approved Hire, we rely on official, unique searches of public records and only share verified, reportable records. Learn more about our screening solutions here.


  1. Share your findings

Once the screening is complete, you can access the results. A copy will also be available to the candidate, if requested. If any of the information is identified by the candidate as inaccurate, incomplete, or unverifiable, the reporting agency must investigate and remove or correct information.


  1. Follow an adverse action process

If a prospective employee’s report leads you to determine they should not be hired, adverse action notices must be sent. A pre-adverse action notice informs the candidate they are being denied the position based on the information in their report. The hiring body must also provide a copy of the report, “A Summary of Your Rights under the Fair Credit Reporting Act,” and specify a reasonable period of time the candidate has to dispute the accuracy or completeness of information in the report.


If the accuracy of the report is not disputed after a reasonable time, an official notice is sent. It must:

  • State the adverse action is based in whole or in part on information contained in your report.
  • Provide the name, address and number of the reporting agency used.
  • Specify that the reporting agency was not involved in the decision to take adverse action and cannot give reasons for it.
  • Provide notice of the right to dispute the accuracy or completeness of the information reported.
  • Inform them of their right to another free report from the agency within 60 days.


  1. Finalize your new hire

Once your decision has been made based on all the information at your disposal and the adverse action process has been followed, it’s time to welcome aboard the candidate you deem the best fit for your team.


Learn more about how Approved Hire can help protect your business’s reputation here.

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