Denying Employment Based on Background Screening Report

March 3, 2015

When you use information in a background screening report to deny (or possibly deny) employment, you must follow Adverse Action Procedures (AAP) outlined within federal law in the Fair Credit Reporting Act sections §603(k)(1)(B)(ii) and FCRA §615. The AAP is in place so applicants who may be or will be denied employment because of details in the report have an opportunity to review the report and address any errors or discrepancies in the information. It also gives them the ability to formally address these errors and discrepancies, as well as other concerns they have about the background screening process.  

The AAP takes minimal time to complete. If you don’t follow this procedure and deny employment, the applicant can walk into an attorney’s office or the EEOC and launch a lawsuit against you for not giving him/her the opportunity to review the report and learn about their rights. Even worse, he/she can allege that you have been avoiding this procedure for a period of time, thus denying certain legal rights to all applicants you have rejected because of information on the report. This can result in a class action lawsuit that can destroy your business.

Employers who do not follow the AAP when required by law face criminal prosecution, which may include the above-mentioned class action lawsuits, significant financial penalties, and other punishment if found guilty of violations.

Contributed by Steven J. Austin of LABORCHEX.

Through the Michigan Chamber partnership with LABORCHEX, members get discounted pricing to employment background screening services. To learn more, please email Kym Lewis or call him at 1-800-880-0366.