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Background Check Guidelines: How to comply with the Fair Credit Reporting Act and avoid lawsuits

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in Career Management,Employment Background Check,Firing,Hiring,HR Management,Human Resources,Leaders & Managers,Management Training,Workplace Communication

Employers and HR professionals should make it their policy never to hire a candidate without a comprehensive background check. But, they also must comply with the Fair Credit Reporting Act (FCRA), which regulates how employers perform employment background checks on job applicants.

Contrary to popular belief, this federal law doesn’t cover just credit checks. It covers any background report, such as driving records and criminal records obtained from a “consumer reporting agency” (CRA).

Under the FCRA, you’re typically free to conduct employment background checks and use the information if you have a clear business interest, such as hiring, firing, reassigning or promoting someone.

But you can’t run a job background check on a whim. You must receive the person’s written permission before obtaining the report. Then, if you decide to act on it (for example, fire a worker or reject an applicant), you must tell that person in writing that you based the decision, in part, on the background check. Tip: Find a clear analysis of which FCRA notification rules you must follow and when in Employment Background Check Guidelines, a special report from Business Management Daily.

Use smart screening practices to steer clear of lawsuits

If you fail to do an employment background check on applicants for certain positions, you could make your organization vulnerable to a negligent-hiring lawsuit by any worker or customer who’s been hurt by a violent employee. A number of court decisions have established the principle that an employer has a “duty of care” to protect workers, customers and clients from injury caused by an unfit employee who an employer knew (or reasonably could have been expected to know) posed a risk.

To help safeguard your company from a negligent-hiring lawsuit, first contact an applicant’s references. But remember: You can’t ask a reference any questions you’re prohibited from asking a job applicant.  

While HR professionals and managers are increasingly using search engines and social networking sites to dig beyond the typical résumé and cover letter, take heed: Googling candidates can carry certain legal risks.

For example: What if you Google only minorities? What if you inadvertently view information about a different person with the same name? What if your search shows a picture of the person in a wheelchair? All scenarios could raise discrimination charges if you reject the candidate.

Best bet: Don’t consider the web a reliable substitute for traditional hiring practices. A face-to-face interview will probably reveal much more of a candidate’s true personality. Plus, it won’t expose your company to liability.

To minimize your organization’s legal exposure to discriminatory failure-to-hire claims:

  • Don’t search for candidate information on the Internet. This eliminates the potential for relying on false and misleading information.
  • Develop interviewing skills and techniques that will draw out the information necessary to enable a legitimate, nondiscriminatory hiring decision.
  • Use a third-party service to conduct thorough background checks on candidates. To ensure the background-checking firm is reputable, choose one that has gone through the National Association of Professional Background Screeners certification and accreditation process.

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