Background Check Risks-Beware!

March 1, 2016

There seem to be a growing number of laws and individual state/county/city restrictions being placed on employers who want to build safe and reliable workforces via a program of background checks.  On top of this, employers are being sued left and right because they aren’t conducting background checks in compliance with federal and local laws.

Here are 3 very important items to keep in mind:

1. You must DISCLOSE to the applicant or current employee that you are going to do a background check. This written disclosure must be on a stand-alone document. In the old days these statements were at the bottom of a job application. That is unacceptable under federal law. This disclosure can be a simple statement, and cannot contain any ‘hold harmless’ or ‘indemnification’ wording.

2. The applicant or current employee must AUTHORIZE the background check with a signature, again on a stand-alone form. The authorization wording should be simple and to the point. Like the disclosure, it cannot contain any ‘hold harmless’ or ‘indemnification’ wording.

3. If you are going to deny employment based in whole or in part on any information in a background check report that you received from a company like Laborchex, Inc. (which is considered a Consumer Reporting Agency), you must go through the Adverse Action Procedure. This federal law (procedure) is designed to give the subject of the report a chance to review it for inaccuracies before he/she is officially denied employment

These steps are VITAL. Class-action lawsuits are being filed almost weekly against employers who violate federal laws. The Fair Credit Reporting Act (FCRA) and your legal counsel are the best resources for details on all of this.

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.