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April 2012
The Secrets of Effective Background Screening
By Tracie Coronado & Ann Easton

     A recent survey has shown that 9 out of 10 employers are running background checks on applicants. In these times of easy access to information, it is more important than ever to have information you trust. Getting information is easy, but getting accurate information is vital.

     Employers may use background screening services for selecting prospective employees, promotions, reassignments and retention, as long as the process is conducted according to the Fair Credit Reporting Act (FCRA) laws.

     Congress has expanded employer responsibilities, however, because of concern that inaccurate or incomplete consumer reports could cause applicants to be denied jobs or cause employees to be denied promotions unjustly. They must ensure (1) that individuals are aware that consumer reports may be used for employment purposes and agree to such use, and (2) that individuals are notified promptly if information in a consumer report may result in a negative employment decision.

     To be covered by the FCRA, a report must be prepared by a consumer reporting agency (CRA). A “consumer reporting agency” is any person or company who, for financial gain, regularly engages in the business of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties.

     A consumer report contains information about an employee or a perspective employee’s personal characteristics, credit characteristics, general reputation, and lifestyle. Reports include criminal history searches, education verifications, employment verifications, social media searches, credit checks, and reference checks.

     If any of these searches are conducted, gathered or reported from other than a reputable CRA source without applying the proper research and adjudication efforts, the employer may be subject to liability.

     The same holds true, if an employer is conducting their own searches. Social Media searches are a new trend in information gathering. The Internet is a great resource which may reveal a person’s activities and true character on sites such as Linkedin, Facebook and Twitter. If the employer is conducting these searches themselves and not utilizing their CRA, the risk of discrimination and violations of federal law increases. By using the CRA, information can be filtered so these searches become compliant under FCRA and other regulations.

     A reputable CRA will be a member of the Background Screening Program, National Association of Professional Background Screeners (NAPBS.) NAPBS is a professional trade association and a great resource for the constantly changing laws governing the background screening industry on both state and federal levels. NAPBS recently added an educational certificate for all employees in the industry to become FCRA-certified. This assures employers that the CRA staff is fully aware of reporting laws.

     Another potential trouble spot in background screening is the security of the data. A concern has arisen about the practice of off-shoring consumer reports. Sending personal and confidential identity information out of the country for processing creates an opportunity for a data breach and identity theft to occur. California is one of the first states in the nation to address serious concerns with companies engaged in this practice. Always ask your background screener if the data is transferred off-shore. If so, beware!

     With the help of a competent CRA, employers can effectively manage the entire background screening process from beginning to end. Adverse action notification must be provided to the applicant when denying a job application, reassigning or terminating an employee, or denying a promotion.

     A CRA can provide guidance to help the employer through the process and remain compliant. By carefully selecting a background screener, an employer equips themselves with the information needed to make informed hiring decisions, mitigates the risk of liability, and remains compliant with federal and state laws. Your CRA should be your trusted partner in achieving your company’s business goals!


Tracie Cornonado is Director of Employment Services, and Ann Easton is Director of Client Services at Data Facts, Inc.
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