The Fair Credit Reporting Act (FCRA) governs background check laws, affecting employers nationwide. The statute applies to all employers who use consumer reporting agencies to screen job applicants.
The effective date of the FCRA is October 26, 1970, with a $1 million threshold for compliance.
Background Check Laws
The FCRA, 15 U.S.C. § 1681, sets the standard for what employers can ask during a background check. In plain terms, this means employers must disclose their intention to conduct a background check and obtain written consent from the applicant. The statute also requires employers to provide a copy of the background check report to the applicant if it is used to make an adverse employment decision.
This is where the law gets teeth, as the FCRA imposes penalties of up to $1,000 per violation for non-compliance. The Equal Employment Opportunity Commission (EEOC) enforces the FCRA, ensuring that employers do not discriminate against applicants based on protected characteristics, such as race or age, within a 180-day time limit.
Eligibility and Requirements
Employers must comply with the FCRA’s requirements, including the 7-year limit on reporting certain information, such as bankruptcies and civil suits. The statute also requires employers to wait at least 5 business days after receiving a background check report before making an adverse employment decision. In practice, this means employers must carefully review the report and provide the applicant with an opportunity to dispute any inaccuracies.
The EEOC enforces the FCRA’s requirements, including the $100,000 penalty for willful non-compliance. The statute also requires employers to maintain records of their background check procedures for at least 2 years, with a 30-day notice period for record destruction.
Required Documents
Employers must provide applicants with a clear and conspicuous disclosure statement, informing them of the background check process and their rights under the FCRA. The statement must include the name and address of the consumer reporting agency, as well as a statement indicating that the applicant has the right to request a copy of the background check report. The FCRA, 15 U.S.C. § 1681d, requires employers to obtain written consent from applicants before conducting a background check.
In plain terms, this means employers must provide applicants with a document that includes the following information: the name and address of the employer, the name and address of the consumer reporting agency, and a statement indicating that the applicant has the right to request a copy of the background check report. The document must also include a statement indicating that the applicant has the right to dispute any inaccuracies in the report, within a 30-day time limit.
The Filing Process
Step 1: Obtain Written Consent
Employers must obtain written consent from applicants before conducting a background check, as required by the FCRA, 15 U.S.C. § 1681b. The consent form must include the name and address of the employer, the name and address of the consumer reporting agency, and a statement indicating that the applicant has the right to request a copy of the background check report. The fee for obtaining consent is typically $0, with a 1-day turnaround time.
In practice, this means employers must provide applicants with a clear and conspicuous disclosure statement, informing them of the background check process and their rights under the FCRA. The statement must include the name and address of the consumer reporting agency, as well as a statement indicating that the applicant has the right to request a copy of the background check report, within a 30-day time limit.
Step 2: Conduct the Background Check
Employers must conduct the background check through a consumer reporting agency, as required by the FCRA, 15 U.S.C. § 1681a. The agency must provide the employer with a report that includes the applicant’s credit history, criminal history, and other relevant information. The cost of the background check is typically $50-$100, with a 3-5 day turnaround time.
This is where the law gets teeth, as the FCRA imposes penalties of up to $1,000 per violation for non-compliance. The EEOC enforces the FCRA, ensuring that employers do not discriminate against applicants based on protected characteristics, such as race or age, within a 180-day time limit.
Costs and Timeline
The cost of conducting a background check can range from $50 to $200, depending on the type of check and the consumer reporting agency used. The timeline for conducting a background check can range from 3-5 days, depending on the type of check and the consumer reporting agency used. In practice, this means employers must carefully review the report and provide the applicant with an opportunity to dispute any inaccuracies, within a 30-day time limit.
The FCRA, 15 U.S.C. § 1681m, requires employers to provide applicants with a copy of the background check report if it is used to make an adverse employment decision. The statute also requires employers to maintain records of their background check procedures for at least 2 years, with a 30-day notice period for record destruction, and a $100,000 penalty for willful non-compliance.
State-by-State Differences
Some states, such as California and New York, have laws that restrict the use of background checks in employment decisions. For example, California’s Fair Employment and Housing Act (FEHA) prohibits employers from using background checks to discriminate against applicants based on protected characteristics, such as race or age, with a $25,000 penalty for non-compliance. New York’s Human Rights Law also prohibits employers from using background checks to discriminate against applicants based on protected characteristics, with a 180-day time limit for filing complaints.
In plain terms, this means employers must comply with both federal and state laws when conducting background checks. The FCRA, 15 U.S.C. § 1681t, requires employers to comply with state laws that are more restrictive than the FCRA, such as the $1 million threshold for compliance in California. Employers must also comply with the EEOC’s guidelines on the use of background checks in employment decisions, with a 30-day notice period for record destruction.
What Can Go Wrong
Common mistakes employers make when conducting background checks include failing to obtain written consent from applicants, as required by the FCRA, 15 U.S.C. § 1681b. Employers may also fail to provide applicants with a copy of the background check report if it is used to make an adverse employment decision, as required by the FCRA, 15 U.S.C. § 1681m. The penalty for non-compliance can range from $1,000 to $100,000, with a 180-day time limit for filing complaints.
In practice, this means employers must carefully review the background check report and provide the applicant with an opportunity to dispute any inaccuracies. The FCRA, 15 U.S.C. § 1681i, requires employers to maintain records of their background check procedures for at least 2 years, with a 30-day notice period for record destruction, and a $100,000 penalty for willful non-compliance. The EEOC enforces the FCRA, ensuring that employers do not discriminate against applicants based on protected characteristics, such as race or age, within a 180-day time limit.
- Office of the Law Revision Counsel. relevant federal statute
- U.S. Courts. federal court procedures
- USA.gov. relevant government resource
