This article will help you:
- Understand your obligations under the FCRA and fair hiring laws
- Set up Checkr’s compliance features
- See how Checkr automatically provides locality-based compliance assistance
Checkr is honored to be your partner, not just in background screening, but in compliance best practices that allow you to improve your hiring process and mitigate legal risk from legal violations.
Checkr is a member of the National Association of Professional Background Screeners (NAPBS), the industry trade association for Consumer Reporting Agencies (CRA). The NAPBS offers an accreditation program for Consumer Reporting Agencies. Governed by a strict and thorough set of professional standards, the Background Screening Agency Accreditation Program (BSAAP) has become a widely recognized seal of approval that brings national recognition to an employment background screening-affiliated organization for its commitment to excellence, accountability, high professional standards, and continued institutional improvement. We are proud that the Background Screening Credentialing Council (BSCC) awarded Checkr its accreditation in April 2015.
We’ve put together this guide to help you understand how you can use Checkr’s solutions to make your hiring processes more compliant.
What do you need to comply with, and why?
All background checks for employment screening are governed by the Fair Credit Reporting Act (FCRA) and comparable state laws. Under the FCRA, employment also covers independent contractor and volunteer relationships.
Many states and municipalities also have locality-specific fair hiring laws such as “ban the box” laws, salary bans, and individualized assessment ordinances, based on guidance from the Equal Employment Opportunity Commission (EEOC).
Not complying with the FCRA or EEOC guidelines potentially exposes you to risk, including lawsuits from applicants or government investigations. The FCRA does not have a limitation on class action damages, so failure to comply can lead to extensive damages.
Your compliance checklist
We’ll help you set up your compliance framework using Checkr’s solutions with this checklist. This is not an exhaustive list, but it covers the main areas of opportunity to implement fairer hiring practices and avoid common areas of legal risk. Work with your legal counsel to check your state and local laws to make certain that you remain industry compliant.
- You must have a permissible purpose to initiate a background check under the Fair Credit Reporting Act (FCRA). Permissible purposes under the FCRA include extending credit to a consumer, a "legitimate business purpose", and for an employment purpose. International background checks also require a permissible purpose. International lawful permissible purposes may be different from the FCRA permissible purposes, and will vary by country. We recommend you work with your legal counsel to ensure you choose the appropriate permissible purpose for the applicable location and your business needs.
- Set up your disclosure and authorization forms. Before you screen a candidate you’ll need to inform them clearly of the background check process with a standalone disclosure. Then they’ll need to authorize you to proceed. Checkr hosts these forms in our hosted flow, but if you use manual orders or our API to run background checks, you’ll need to make sure that you deliver disclosures and gain authorization.
- Create an Adverse Action procedure, and stick to it. If you decline to hire, engage, retain, or promote a candidate based on information in the background check report, protect yourself from legal exposure by making sure you give the candidate notice and maintain a reasonable waiting period before taking final action.
- Set up the Positive Adjudication Matrix. Checkr’s powerful Positive Adjudication Matrix lets you de-emphasize offenses that are minor or not relevant to the job position to increase your efficiency by saving you time as you review reports and letting you hire more quickly. Consistently clearing crimes that are unrelated to the job also reduces your legal risk by eliminating subjectivity and bias in the hiring process.
- Use the Individualized Assessment Tool. Some cities will issue fines if you don’t “show your work” for why you declined a candidate based on criminal history. Checkr’s assessment tool walks employers through the individualized assessment process, documents the analysis, and provides the assessment to the candidate. Train your team not to skip this step, and to use the required forms in the cities of New York and Los Angeles.
- If doing credit checks, certify your purpose with Checkr. Several states and cities have laws limiting credit checks for employment purposes. Many require that the credit check relates to the job position (e.g. the job requires access to financial assets or confidential information). Contact Checkr’s Customer Success Team to verify that you have a permissible purpose before requesting a credit check in these locations.
- Observe "Ban the Box" laws where you hire. Several states and cities have laws limiting how you discuss criminal or salary history with candidates. Each law is slightly different and may govern whether you can mention criminal history on a job description or application, when you can run a background check, and how you consider criminal records on a background report.
How Checkr assists with compliance
There are several areas of legal and compliance risk when it comes to fair hiring and employment-related background checks. That’s why Checkr automates areas where manual work can lead to errors. For example:
- Based on candidate/employer location, Checkr can provide locality-specific compliance assistance.
- For states that have separate disclosure requirements, Checkr will serve those disclosures to candidates in the hosted application flow.
- For localities that have longer waiting periods than 7 days for adverse action notices, Checkr will automatically enforce the longer waiting period.
- Use our Positive Adjudication Matrix to automatically de-emphasize minor or job-irrelevant offenses. If you’re not manually considering these offenses, your process is more likely to be consistent and compliant. It will also make you more efficient, saving you time as you review reports and enabling you to hire more quickly.
- If you are hiring candidates in locations that require employer to “show their work” through individualized assessment, Checkr will automatically insert a step into the adverse action process to provide the individualized assessment, and send the documentation (or upload city-issued forms) to the candidate.
Checkr's guidance should not be construed as legal advice, guidance, or counsel. Companies should consult their own legal counsel about their compliance responsibilities under the FCRA, Title VII, and applicable state laws. Checkr expressly disclaims any warranties or responsibility or damages associated with or arising out of information provided.