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As the Consumer Financial Protection Bureau (CFPB) takes over the enforcement of the Fair Credit Reporting Act (FCRA), employers will be required to use a new version of the FCRA Summary of Rights when conducting background checks, according to an article by Littler Employment & Labor Law Solutions Worldwide.

Criminal background checks are subject to the FCRA because the information for those checks comes from consumer reports. If you are a recruiter who places contractors and runs your own back office, you must comply with the FCRA when running background checks on your contractors. The FCRA requires you to provide the candidate with a “pre-adverse action disclosure” before you take adverse action based on the findings of the background check. The disclosure must include a summary of their rights under the FCRA and a copy of the results.

The summary of rights has changed slightly due to the transfer of enforcement responsibilities from the Federal Trade Commission to the CFPB. Employers must start using the new version no later than January 1, 2013.

With this in mind, it seems like a good time to go over the basics of conducting background checks on contractors:

  • It is best practice (and the law in some states) to wait until a conditional job offer has been extended to run a background check.
  • An arrest does not prove criminal conduct, so you should not disqualify a candidate based solely on an arrest record, per recent guidance by the Equal Employment Opportunity Commission (EEOC).
  • The new guidance also states that you should not have a blanket prohibition on any conviction and you should have a job-related reason for denying employment based on a conviction.
  • Many states limit your ability to use criminal history in employment decisions, so make sure you know the laws in the states in which you have contractors.
  • Before conducting a background check, you must get the candidate’s authorization in writing and provide them with a notification stating that a consumer report will be used. This notice and authorization can be electronic.
  • Before you can take an adverse action, you must send the candidate the pre-adverse action disclosure as described above.  If the candidate doesn’t take steps to correct inaccurate information in a reasonable amount of time (usually seven days), you can then withdraw the job offer, but you must provide the candidate an“adverse action notice.” The notice must include the name and contact information of the vendor that provided the report, a statement that the reporting agency did not make the decision for adverse action, and a notice of the individual’s right to dispute the information from the background check.

Clients often require that background checks be conducted on contractors placed with them, so if you do not currently conduct background checks, you probably will at some point. You can outsource this and other administrative tasks to a contract staffing back-office, such as FoxHire®Contracting.  Our standard background checks include:

  • Social Security Number verification
  • Statewide misdemeanor and felony check
  • Sex offender
  • Address history
  • County level specific checks for the places the contractor has lived

For more information, call us at (330) 454-3508.

This article is for informational purposes only and should not be construed as legal advice.

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