The Fair Credit Reporting Act (FCRA) and the Indian Child Protection and Family Violence Prevention Act are federal laws that govern how consumer reports, including background checks, are obtained and used. These laws play critical roles in employment background screening as they ensure that the information gathered by hiring officials and businesses from consumer and investigative reports is used fairly and responsibly for the purpose of protecting individuals from inaccurate or unfair reporting and ensuring transparency in the hiring process. Employers who conduct background checks must ensure requirements are in place to avoid legal pitfalls and protect applicant rights.

Key FCRA Compliance Requirements for Employers

To stay compliant with the FCRA, employers must adhere to the following steps:

1. Obtain Written Consent from the Applicant. Before running a background check, you must provide a clear and separate disclosure form explaining that a consumer report will be used for employment purposes. The applicant must sign a written authorization form before proceeding.
2. Provide a Pre-Adverse Action Notice. If a background check reveals information that may lead to a negative hiring decision, you must:

• Provide the applicant with a summary of the report
• Include a summary of their rights
• Allow time (typically five business days) for the applicant to dispute any inaccuracies

3. Issue a Final Adverse Action Notice. If the employer decides not to hire the applicant based on the background check, they must send a final adverse action notice that includes:

• The reason for the decision
• Contact information of the background screening company or original record holders
• A statement that the screening company was not responsible for the hiring decision
• The applicant’s right to dispute the report

4. Ensure Accuracy. Employers must ensure that background check reports are accurate and up-to-date.
5. Safeguard Consumer Information. Sensitive data collected from background checks must be securely stored and disposed of properly to prevent unauthorized access or identity theft.

Common FCRA Compliance Mistakes Employers Make

Here are some common mistakes to avoid:

   ❌ Using outdated or incorrect background check reports

   ❌ Failing to provide proper disclosures or obtain applicant consent

   ❌ Skipping the pre-adverse action / due process

   ❌ Not allowing applicants to dispute inaccurate findings

   ❌ Improperly storing or sharing confidential data

Why FCRA Compliance Matters

Non-compliance with FCRA and/or Indian Child Protection and Family Violence Prevent Act regulations can result in lawsuits, regulatory fines, and reputational damage for employers as well as the applicant. Staying compliant not only protects your company and/or employer but also ensures a fair hiring process for all applicants.

Final Thoughts: Protect Your Business or Agency with Compliance

By following best practices—such as obtaining proper consent, providing pre-adverse and adverse action/due process notices, and ensuring data accuracy—hiring officials and businesses can maintain a legally sound hiring process.

If your organization conducts background checks, consider working with a trusted background screening provider to ensure compliance and other applicable laws. Staying informed and proactive will help your business or agency build a fair and compliant hiring process.

Want to learn more or if you are in need of background screening solutions? PSC, Inc. is here to assist. Contact us today to learn more.