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FCRA Disclosure and Authorization Requirements: What HR Needs to Know

The Fair Credit Reporting Act (FCRA) may have been enacted almost fifty years ago, but making sure that your hiring practices are compliant with FCRA regulations is a continual journey. The FCRA protects consumers from having their data shared wantonly—as well as helping them to give permission only to those they authorize to use their data.

The act covers a lot of other ground, such as allowing individuals access to their credit and data. However, for today’s purposes, let’s focus on a particular situation that many employers face and fail: the FCRA disclosure and authorization requirements.

Connected Processes, Separate Steps

To begin, employers who want to use background checks to assist them in their hiring processes must reasonably respect their applicants’ privacy and help them understand the process through which they are going. With the FCRA disclosure, you are giving the applicant information about the fact that you run background checks on applicants, as well as how you do so.

With the FCRA Authorization, you are further outlining what will be done and what information you need to do it. While FCRA disclosure and authorization are connected processes, for the FCRA, they must be treated as individual steps.

Why does it matter that you learn and implement correct FCRA disclosure and authorization practices? Well, the biggest concern is a practical one: lawsuits citing unfair labor practices or inequitable use of applicant data aren’t pretty.

An additional concern is that, even in medium-sized enterprises, these processes become standardized. If you are disclosing and authorizing background checks incorrectly, you may be doing so for dozens of applicants—opening you up to a vast world of liability. Getting these steps right, even in the small details, can close the loop to avoid litigation and help you inspire confidence in your applicants at the same time.

Getting the FCRA Disclosure Right

First, understand that disclosure is a notification made to your applicants that they will have a background check conducted on them. If you are using a third-party provider like CNet Technologies, you are expected to disclose this as well. The disclosure can be worded a variety of ways, but there are three critical components:

  • Avoid jargon: FCRA documentation expects this information to be as transparent as possible to the job candidates, so rather than focusing on long words or technical language, focus on communicating the facts of the matter clearly.
  • Make it prominent: The FCRA wants you to place the disclosure or notification language in a conspicuous location—not just wedged between many other statements in the application. It’s also wise to avoid the “classic” technique of hiding details in small lettering somewhere throughout the fine print.
  • Use a separate page or document: The FCRA suggests giving this disclosure “in writing in a standalone document.” This is usually interpreted as printing out the disclosure, so it doesn’t get glossed over online. It’s also good practice to place it on separate pages rather than being treated as the continuation of another form.

One way that people “save paper” without violating the FCRA is to combine the notification or disclosure of a background check with the authorization of that same background check with the understanding that you can’t put anything else on the page. Still, these two items are intricately connected; you can combine the FCRA authorization with the disclosure documents and vice versa.

Getting the FCRA Authorization Right

The authorization may contain repetitive language, reinforcing that pre-employment background checks will be conducted and will have a bearing on the hiring decision. It also is where the company collects the information they intend to use to run background checks, including:

  • Address
  • Name
  • Social security number
  • Any other information requested by a third-party provider.

Unfortunately, a common source of FCRA violations is when the contract terminology for a job applicant is squeezed into a list and has a single signature section to save time. You should never combine the FCRA authorization with things like:

  • Liability waivers
  • The certification of the accuracy of the application
  • Acknowledgments of employer and position type.

Like the disclosure, the goal is for these crucial components to stand alone so that applicants give these sections their full and undivided attention and are actively involved in their decision to submit to a background check. The FCRA is designed to make sure that applicants are actively choosing this option so that if their background check causes them to be dismissed from consideration, it doesn’t blindside them.

Compliance Is Easy With CNet Technologies!

If you have worries about meeting compliance when it comes to the FCRA disclosure and authorization requirements when conducting background checks, work with the third-party screening professionals at CNet Technologies!

While we can’t substitute for legal counsel, we can guide you towards achieving the highest standards of compliance. We understand the federal restrictions imposed on employers as well as many local and state background check regulations that may be even more strict! Our inside insight into the nature of background checks allows us to ensure thorough, consistent, and ethical screening.

Let us pass our expertise on to you and keep you informed and compliant! We’ve worked with businesses that run the gamut of scale and scope: get in touch with us today to see how we can put our tech-driven approach to screening to work for you.

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