Simple Compliance With a Complex Law

Posted: Updated:

An Indiana company is facing a federal class-action lawsuit for failing to comply with a complex law related to hiring. Yet they could have avoided that lawsuit by following three remarkably simple steps. How do you keep your company from being the next target?

The law is the Fair Credit Reporting Act, but the lawsuit has nothing to do with granting credit. It's all about how the company used background screening to make a decision about a candidate for employment.

The case involved an applicant for a home healthcare company. As anyone who has hired someone to provide care for a loved one would hope, the company is diligent about performing background checks on its potential employees. This applicant's background check revealed multiple felonies, so the company refused to hire her.

Two problems. First, the applicant insists that the felonies never happened and that the background screening company made a mistake. Second, the home healthcare company failed to follow the three simple steps prescribed by the FCRA. Had they done so, they probably wouldn’t be preparing for litigation.

Step one is to provide a disclosure to applicants that your hiring decision may be based on a background check (and this must be separate from any other disclosures or forms). If the background check reveals something that would lead you to not hire the applicant, step two is to send them what’s known as a pre-adverse action letter, a copy of the background screening report, and a summary of their rights -- including an opportunity to dispute any of the information in the report. After at least five days, you can take step three, which is to send the "adverse action letter" telling the applicant you're not hiring them.

Had the home healthcare company followed this process, the applicant would have been made aware of the negative information in the background check. She then could have disputed it. If it turned out that the criminal information was incorrect, the company probably would have hired her. Had the information been accurate, they could have rejected her without worry of a legal action under the FCRA.

If your company is using background screenings as part of the employment process, you need to pay attention to cases like this -- more and more of which are being filed nationwide -- and make sure you’re taking the right steps. Why? Because the proverbial sharks are circling and they’re hungry.

When I started my company 14 years ago, we struggled to find attorneys who had a solid grasp of the FCRA from the employer’s perspective. We knew the law contained potential landmines, and we wanted to protect ourselves and our clients. Today, though, you can find plenty of FCRA-savvy law firms. Only problem is that they’re on the other side, looking for employers to sue. Refuse to hire someone without going through these steps, and in a few minutes of Google time, that person can find dozens of law firms that will be only too happy to handle his or her case. And while you might prevail, if you scan recent cases, you’ll see plenty of reasons to be pessimistic.

Do background screenings sometimes find incorrect information? Absolutely. In fact, it happens fairly frequently. Some background screening firms, particularly the ones that advertise low prices, simply pass the faulty information along to the employer. That means the employer is making a decision based on bad information.

Reputable background screening firms take a deeper look. For example, if we find criminal information on our initial search, we look deeper. We’ll actually verify the information with local, state, and federal courts. If we discover that something is wrong with the data, we’ll contact the applicant and guide them through the process of correcting it. We have an ethical obligation to protect our clients, but we feel that protecting the rights of the individuals we research is every bit as important.

A reputable background screening company should also help you comply with FCRA and other legal requirements. The software our clients access automatically reminds them of the steps and timing, and generates documents when needed.

As an interested observer, I watch cases like this very closely, and they frustrate me. I’m not frustrated because of the regulations, but because running afoul of those rules is so easy to avoid. Are you completely confident that your company isn’t making the same mistakes?

Mike McCarty is CEO of Danville-based Safe Hiring Solutions.

  • Perspectives

    • It's Time For The U.S. to Adopt a Presidential Regional Primary and Caucus System

      As a high school senior at North Central High School in Indianapolis, Martin Moore, one of the best teachers that I ever had, challenged our Accelerated American Government class to think about how we nominate presidential candidates in the United States. Little did I know at the time that our conversations about changing the presidential primary/caucus structure would ring so true a few decades later. In response to Mr. Moore’s challenge, I wrote a paper outlining...

    More

Subscribe

Name:
Company Name:
Email:
Confirm Email:
HTML
INside Edge
Morning Briefing
BigWigs & New Gigs
Life Sciences Indiana
Indiana Connections
INPower
Subscribe
Unsubscribe

Events



  • Most Popular Stories

    • Fishers Among Finalists For National Prize

      The city of Fishers is one of 12 finalists for the Robert Wood Johnson Foundation Culture of Health Prize. The award honors "communities that are bringing partners together around a shared commitment to health, opportunity, and equity."

    • Greenwood CEO Named Small Business Person of the Year

      The chief executive officer of a Greenwood-based company has been named the 2019 Small Business Person of the Year for Indiana. U.S. Small Business Administrator Linda McMahon announced Monday this year's winners from all 50 states, the District of Columbia, Puerto Rico, and Guam. 

    • Campaign to Honor Former Butler Star

      An orthodontic practice in central Indiana has launched a campaign supporting a nonprofit honoring former Butler University basketball star Andrew Smith. Gorman & Bunch Orthodontics says the Be The Change campaign aims to have up to 430 people join the bone marrow registry. Jason Bunch is spearheading the effort and says the practice wanted to support Project 44 after its founder, Andrew Smith's wife, Samantha Smith spoke at an event it hosted by the practice.

    • Greenwood CEO Named Small Business Person of the Year

      The chief executive officer of a Greenwood-based company has been named the 2019 Small Business Person of the Year for Indiana. U.S. Small Business Administrator Linda McMahon announced Monday this year's winners from all 50 states, the District of Columbia, Puerto Rico and Guam.   Casey Wright is the CEO of Wright's Gymnastics Academy and Ninja Zone.

    • Matt McIntyre is co-founder and executive director of Brackets For Good.

      Brackets For Good Launches New Program

      Indianapolis-based Brackets For Good Inc. is changing up its annual fundraising program. The sports-themed fundraising organization has launched Champ's Charity Challenge, in which users can fill out brackets for the NCAA men's college basketball tournament in the name of their charity of choice. The previous iteration of the program saw nonprofits competing in a tournament-style bracket of their own to see who could raise the most money. In an interview with Inside INdiana Business...