When Asurint brings users of our background search technology together, we field a lot of questions about compliance. For example, what is the difference between the Equal Employment Opportunity Commission (EEOC) rules and the Fair Credit Reporting Act (FCRA) for employers? And what do the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) have to say about background investigations?
The regulatory landscape can be confusing, because when it comes to an employer’s use of background reports, the EEOC, FTC, and CFPB all have something to say. We’ve used a lot of acronyms here, so let’s break it down.
Most people think of CRAs in reference to credit reporting, which many of us are familiar with from qualifying for a mortgage, auto loan, or other form of credit. There are also rules, however, about the use of background investigations—more officially known as consumer reports—for employment purposes. If an employer uses a CRA to obtain background checks, the FCRA applies.
The EEOC enforces federal laws that protect against discrimination based on protected classes defined by race, color, national origin, sex, religion, disability, age, or genetic information. Key laws for employers include Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, and the Genetic Information Nondiscrimination Act.
As it pertains to the use of criminal information in employment decisions, the EEOC’s guidance encourages employers to view criminal history information on an individual basis (referred to as individualized assessments) and discourages employers from using arrest-only information in hiring decisions unless legally required to do so in accordance with federal law or regulations. While the guidance is not law, employers have faced – and continue to face – lawsuits filed by the EEOC based on their use of criminal and/or credit information in employment decisions, so it’s vital to work with counsel when you shape process and policies.
Our Evaluating Background Checks white paper has helpful information about considering criminal background information in hiring decisions, taking into account the EEOC’s guidance.
For employers, there are four key FCRA requirements related to background checks:
The Asurint website is also updated frequently to serve as a resource on background search compliance. For example, we have plenty of blog posts, and our Resource Center includes various white papers on essential compliance topics, including a guide to state “Ban the Box” laws.
Most importantly, employers should engage their own qualified legal counsel in all compliance efforts. And they can benefit from working with background investigation providers that put a high priority on compliance, building it into the technology and operating with extensive internal compliance expertise.
If you need this kind of background search partner, contact us at 800.906.2035.
The regulatory landscape can be confusing, because when it comes to an employer’s use of background reports, the EEOC, FTC, and CFPB all have something to say. We’ve used a lot of acronyms here, so let’s break it down.
What is a CRA?
Companies in the business of performing background checks on behalf of employers are covered by the Fair Credit Reporting Act’s definition of consumer reporting agencies, or CRAs.[1]Most people think of CRAs in reference to credit reporting, which many of us are familiar with from qualifying for a mortgage, auto loan, or other form of credit. There are also rules, however, about the use of background investigations—more officially known as consumer reports—for employment purposes. If an employer uses a CRA to obtain background checks, the FCRA applies.
What Does the EEOC Oversee?
Importantly, the EEOC does not have oversight of employers or CRAs under the FCRA. Their oversight is a different can of worms, so to speak.The EEOC enforces federal laws that protect against discrimination based on protected classes defined by race, color, national origin, sex, religion, disability, age, or genetic information. Key laws for employers include Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, and the Genetic Information Nondiscrimination Act.
As it pertains to the use of criminal information in employment decisions, the EEOC’s guidance encourages employers to view criminal history information on an individual basis (referred to as individualized assessments) and discourages employers from using arrest-only information in hiring decisions unless legally required to do so in accordance with federal law or regulations. While the guidance is not law, employers have faced – and continue to face – lawsuits filed by the EEOC based on their use of criminal and/or credit information in employment decisions, so it’s vital to work with counsel when you shape process and policies.
Our Evaluating Background Checks white paper has helpful information about considering criminal background information in hiring decisions, taking into account the EEOC’s guidance.
How Are the FTC and CFPB Involved in Background Checks?
Here’s where the FCRA comes in. FCRA enforcement falls under the CFPB’s jurisdiction. The FTC also has the authority to investigate and regulate companies under the FCRA. Generally the CFPB and FTC remain focused on CRA activities and compliance with the FCRA, but the FTC has issued past informal guidance to employers on how to meet their requirements as well.For employers, there are four key FCRA requirements related to background checks:
- The applicant must receive a clear and conspicuous disclosure—consisting solely of the disclosure—that a background investigation will be performed. This disclosure must state the purpose (employment) for which the employer is obtaining the background report.
- The candidate must give formal authorization in writing for the employer to have the report compiled.
- If a negative employment decision may be made based on the results (including not hiring, failing to promote, terminating employment, etc.), the applicant must receive a pre-adverse action notification before the decision is final, be given access to the report and an explanation of their rights, and have an opportunity to contest the information.
- Once a reasonable period of time has passed after the pre-adverse action notice, the employment decision can be finalized. The employer must then provide adverse action notification to the candidate. The FCRA includes specific requirements for this final adverse action notice.
Resources on EEOC and FCRA Compliance
Even the EEOC and FTC recognize their shared interest when it comes to background searches conducted for employment purposes. The agencies have helpfully co-published guidance documents with best practices. The one for employers can be found here.The Asurint website is also updated frequently to serve as a resource on background search compliance. For example, we have plenty of blog posts, and our Resource Center includes various white papers on essential compliance topics, including a guide to state “Ban the Box” laws.
Most importantly, employers should engage their own qualified legal counsel in all compliance efforts. And they can benefit from working with background investigation providers that put a high priority on compliance, building it into the technology and operating with extensive internal compliance expertise.
If you need this kind of background search partner, contact us at 800.906.2035.