What Should Be Included in Your Background Check Disclosure Forms?
Your background check disclosure forms can make all the difference in the quality and compliance of your background screening program. When you use the correct disclosure forms during the hiring process, you’re not just checking a compliance box; you’re taking the right steps to protect your organization and keep candidates informed about an important part of the hiring process.
Like most organizations, you conduct background checks to reduce hiring risk and protect the workplace. However, using outdated or erroneous disclosure forms can increase the hiring risks you were trying to mitigate. The penalties for improper disclosure can lead to lawsuits, fines, and reputational loss. Here are just a few examples of what can happen when you don’t follow proper disclosure procedures:
- A major retailer was accused of violating the Fair Credit Reporting Act (FCRA) requirement to keep background check disclosures “stand-alone” and free of extraneous information. The company paid a $1.1 million penalty as part of the class-action settlement.
- An employer and its background check company lost a class-action suit for including a liability waiver with their disclosure forms.
- A staffing agency working on behalf of a hospital client was sued for taking adverse action without providing the job applicant with a written description of his FCRA rights.
The disclosure forms you use gets the background check process started off right. Here are some useful tips for maintaining compliant background check disclosure forms.
Understand the Role of the FCRA in Background Check Disclosures
The most important legal guidance for what to include in background checks comes from the FCRA. The FCRA is enforced by the Fair Trade Commission (FTC) and it governs how background checks must be administered, including guidelines for users of consumer reports. A background check is a type of consumer report, and your organization and the provider you use to conduct background checks are considered users of consumer reports.
All employers conducting background checks must satisfy FCRA rules for disclosure and authorization. Before your organization conducts a background check, you need to take the following actions:
1. Put the disclosure in writing.
Your background check disclosure forms should stand on their own and provide clear explanations of what happens during a background check. They shouldn’t be buried in an employment application or other recruitment documents. The FCRA requires a “stand-alone” written disclosure notifying candidates that a consumer report may be obtained.
2. Get authorization.
Employers are prohibited from conducting a background check without candidate knowledge or authorization. Your written disclosure must come with forms for the candidate to provide written approval to conduct a background check.
3. Affirm your disclosure process.
The screening company conducting background checks on behalf of your organization needs confirmation that you are following applicable laws related to disclosure and authorization. Provide a written confirmation to your screening provider that you have received the candidate’s authorization to conduct a background check for employment purposes. You must also confirm that the background information will not be used in violation of federal or state equal employment laws.
4. Explain the adverse action process.
Your disclosure process must explain what happens if background check results prompt an adverse employment action. You’ll need to provide candidates with a letter advising that adverse action might be taken if their background check contains information that would negatively impact their employment. Before taking any adverse action, provide a copy of the consumer report to the candidate along with a summary of their rights.
What to Include in Background Check Disclosure Forms
Disclosure forms don't just satisfy legal requirements. The forms also help candidates understand how their prospective employer will obtain and use background information. To keep candidates well-informed and to conform to FCRA regulations, your disclosure forms need to contain the following items:
- The definition of a consumer report
- A description of the specific information that will be collected as part of the background check
- A copy of the document “Summary of Your Rights Under the Fair Credit Reporting Act”
- Notification and instructions for obtaining a copy of the consumer report
You’ll also need to provide candidates with the applicable state-specific disclosure, if one exists for the hiring location. Some states, such as California and New York, have specific disclosure requirements for employers conducting background checks. Keep in mind that a 2019 court ruling prohibits combining federal and state disclosures, so the two may no longer be part of the same document you give to candidates. Adding state disclosure information to your main disclosure forms violates the FCRA “stand-alone” document requirement.
What Not to Include in Your Disclosure Forms
Compliant disclosure forms can also be defined by what it does not contain. Forms with additional information, whether related to the hiring process or not, can be rendered non-compliant and can put the organization at risk for FCRA penalties. Some organizations have paid million-dollar penalties for including extra language in their background check disclosure forms.
To steer clear of liability, keep the following items out of your disclosure forms:
- Liability waivers requiring candidates to release you or your background check provider from any future legal action
- Information unrelated to the background check, for example, details related to at-will employment policies, interviews, or hiring processes
- A question or checkbox asking about the candidate’s criminal history; including this question is a violation of FCRA rules as well as ”ban the box” legislation
- A separate document or wording about an “investigative consumer report,” which is not the same as an employment background check (according to the FTC, “Employers who use investigative reports—reports based on personal interviews concerning a person's character, general reputation, personal characteristics, and lifestyle—have additional obligations under the FCRA”)
- Old or outdated name and contact information for the screening company conducting the background check
How to Provide Consistent and Compliant Disclosures
With the help of a trusted background screening partner, you can build a background screening process that includes compliant disclosure forms. However, relying on just any screening company doesn’t guarantee that you’ll stay in compliance. In 2019, a background screening company paid $8.5 million in penalties to resolve allegations of FCRA violations.
When your background screening company is a consumer reporting agency (CRA) committed to FCRA compliance, you get advice and insights that help you meet your background check disclosure obligations.
Your background screening company can support your use of compliant disclosures by:
- Conducting periodic audits of your background screening program, including reviews of your disclosure and authorization forms
- Automating your disclosure and authorization process with e-disclosure tools
- Helping you stay abreast of changing regulatory requirements, including any changes to FCRA guidance and applicable state laws
Deliver Compliant Disclosures Every Time
You can build an effective background screening program with disclosure practices that meet applicable federal and state laws. With regular reviews and the guidance of a trusted partner, you can prevent your disclosure forms from easily falling out of date or out of compliance, and protect the organization from lawsuits and costly penalties. While you focus on managing a busy hiring process, let your background screening provider keep an eye on the compliance landscape. Together, you can maintain a healthy background screening and disclosure process.