What to Do When a Background Screening Report Raises Red Flags

May 1, 2018

You've just received a background screening report from a third-party provider on a job applicant or current employee and, unfortunately, the news isn't good. If rejecting an applicant or terminating an employee is in order, there are certain procedures an employer must follow as specified in the Fair Credit Reporting Act.

  1. The employer must provide a pre-adverse action notification to the employee or applicant, enclosing a copy of the background screening report as well as a federal government notice entitled, “A Summary of Your Rights under the Fair Credit Reporting Act.” It is sometimes forgotten that this governmental notice was updated in late 2012. If an employer’s notice refers to the Federal Trade Commission instead of the Consumer Financial Protection Bureau, it is using an obsolete version.
  2. After providing the pre-adverse action materials identified above, the employer must wait a reasonable period of time to allow the applicant or employee to identify inaccuracies or mistakes in the report. At least one opinion letter from the Federal Trade Commission has suggested that five business days is reasonable, so that is a typical rule of thumb.
  3. Upon completion of the waiting period, the employer must send an adverse action letter to the applicant or employee stating that it is taking adverse action based in part or whole on the screening report. The FCRA requires that employers include very specific content in the adverse action letter (approximately five different items), so they should be sure to check the statute before drafting the letter.

 Contributed by Ricky Rayborn of LaborChex.

Through the Michigan Chamber's partnership with LaborChex, you don’t have to worry about applicants tricking the system. To learn how you can get access to quality, discounted pricing for employment background screening services, call 1-800-880-0366 and mention the Michigan Chamber.