2020 Background Screening Best Practices

February 24 2020
3 min read

Scott Paler recently joined us for a discussion to share his thoughts on Best practices for background screening in 2020.  Scott is a partner at DeWitt LLP, serves as the chair of the Firm's Background Screening Practice Group, and is an active member of the Firm's Litigation Practice Group.

Read on for some of Scott’s most important takeaways.

Changes in the Legal Environment

In the last five years, background screening lawsuits have continued to increase at a noteworthy pace. With this increase, the decisions being made seem to skew against employers overwhelmingly, but we are starting to see more favorable decisions as time goes on.  We’re now seeing somewhat of a mixed bag of court decisions, some favorable and some not. And as this increase continues, we expect that mixed bag to only grow. 

Large settlements are becoming more and more common as well, oftentimes with seven-figure settlements coming out of background screening lawsuits. This is because if a plaintiff’s attorney finds an issue with an employer’s background screening consent form or adverse action letter, they are able to create a case that spans multiple employees and often many years. So, the resolutions tend to be much larger than would be expected. 

There is an increase in state and local laws that restrict the way employers consider criminal history information and credit history information. There was a movement in blue jurisdictions across the country to try to make it easier for ex-offenders to get jobs and those laws impose substantive restrictions and procedural requirements for employers. Overall we are seeing a significant increase in the number of cases filed and the number of larger settlements being made, the most common cases filed being around written consent and adverse action.


Written Consent Paperwork

As an employer, you know that in order to conduct a background check, you have to get written consent from applicants or employees.  The federal law that deals with this area, the Fair Credit Reporting Act imposes certain requirements. The biggest consent requirement is the Disclosure requirement.  A company that wants an employee to consent, must provide a disclosure that states the purpose of the background screening. This has been a hot topic because the FCRA has stated that this disclosure must stand alone, and many employers have gotten into litigation because their disclosures included additional information like state law notices. This written consent law is particularly complicated in states like California.

Best Practices for Consent Paperwork
  • Avoid including “disclosure” in the employment application or as part of any larger document. 
  • Authorizations and disclosures should be separate documents
  • Consider removing any information in your Disclosure that could be deemed “extraneous” from Disclosure: 
    • Release of liability 
    • At-will statements
    • “You better be honest” statements
  • Summary of Your Rights document always provided
  • State-specific disclosures 
  • Beware of asking about criminal history (ban the box)


Adverse Action Procedures

The Fair Credit Reporting Act (FCRA) imposes specific requirements on employers that are thinking about taking adverse action against an applicant or employee based on a background screening report. 

This process is required by congress and is three steps: 
  • Step 1: Provide specific pre-adverse notice with copy of the report and Summary of Rights. 
  • Step 2: Wait a reasonable period of time for a dispute to be raised. 
  • Step 3: Provide specific post-adverse action notice. 

When an employer moves forward with adverse action, they are obligated to ensure that a Summary of Rights document is provided along with the background report to their candidate.

New areas of focus on lawsuits have created changes in these processes. The movement that has started as of late, calls into question employers’ strict bright-line practices or policies that result in strict no-hire exclusions. This is related to any hiring matrices that produce automatic “fail” or “no-hire” results before a formal individualized assessment process.  Automatic exclusions typically revolve around serious offenses, but there is new best practice guidance now that says that if you have automatic exclusions like this, you are not giving an applicant the right to consider each candidate individually before making a final decision. 

Keep up with the constant changes that occur in the background screening industry on both a federal and state level to avoid putting your organization at risk. Contact us today to see how Orange Tree can help. 

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