The Four Steps of an Employment Background Check

Employers conducting background checks of employees or prospective employees need to be aware of the the Fair Credit Reporting Act (“FCRA”) and its protection of their consumer reports. In 2013, when the FCRA was amended, employers were given additional responsibility to obtain permission and to perform follow-up prior to requesting a consumer report. An employer must adhere to all of the requirements of the law regardless of what type of information it is looking for.

4 Steps for Employer Background Checks

If an employer is conducting a background check or reviewing an employee or job applicant’s consumer report, it must follow all four steps of the FCRA prior to requesting a copy. The four steps an employer must take are notification, certification, providing a pre-adverse action notice, and notifying the employee or applicant of any adverse action taken.

Step 1: Notification

First, an employer must notify the employee or applicant of the employer’s intention to access a consumer report. This notice must be done in a clear and conspicuous manner using a written document. This document must explain that any decision made based upon the information contained in the consumer report can and may affect their job. This document must “stand alone” with no additional or misleading information aside from just the notice of performing the background check. The document must explain that the employer is requesting information that will explain the employee or applicant’s character, reputation, and additional personal information, credit history, and criminal background.

Step 2: Certification

The second step, certification, requires the employer to prove to the consumer reporting agency that it has the employee or applicant’s express written consent to conduct the background check and access a report.

Step 3: Pre-Adverse Action Documents

Third, the employer must provide the applicant with pre-adverse action documents. If the employer plans to make an employment decision that will negatively impact the employee or applicant, it must follow three steps before taking any adverse action. First, provide the employee or applicant with a copy of their consumer report; second, provide the employee or applicant with the Summary of Rights under the FCRA: and third, provide the employee or applicant with a written explanation of the process. This process will allow the employee or applicant the opportunity to review their credit report and dispute any inaccurate, negative information that may harm their chances of continuing or gaining employment.

Step 4: Notice of Adverse Action

Last, if the employer chooses to take adverse action against the employee or applicant based on information it obtained from the consumer report, the employer must first provide notice to the applicant of its intention. Next, the employer must provide the employee or applicant with the name and address of the consumer reporting agency that provided the report along with a statement that: “The consumer reporting agency did not make the decision to take the adverse action and is unable to provide the applicant the specific reasons why the adverse action was taken.” The employer must provide notice to the employee or applicant that they have the right to obtain a free copy of their report from the agency used within 60 days and lastly, a written explanation of the process.

If you believe your rights have been violated under the FCRA and you would like the advice or assistance of counsel, contact SmithMarco P.C. for a completely free case review.

Larry Smith

Consumer Rights Attorney at SmithMarco, P.C.
Larry P. Smith is a consumer attorney and the founder and Managing Partner at SmithMarco, P.C. He has tried dozens of consumer rights cases to verdict and has arbitrated over 700 cases. Additionally, he has amicably resolved over 3,000 consumer fraud, Fair Credit Reporting Act and Fair Debt Collection Practices Act cases via settlement. Mr. Smith has been a guest on multiple radio outlets including WLS and WGN in Chicago providing consumer advice. Mr. Smith also provides leadership and delivers lectures to the National Association of Consumer Advocates, The National Consumer Law Center, and the Chicago Bar Association.
Larry Smith

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