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What Employers Should Know about Background Checks and the Fair Credit Reporting Act

When background screening reports are used to make a hiring decision, there is a specific Federal law that requires certain actions to be taken by the employer. This law also requires certain actions be taken by Zaeplex, the agency providing the background screening reports. This federal law is called the Fair Credit Reporting Act, also referred to as the FCRA. The FCRA, in part, was enacted to protect the person who is the subject of a background screening report. Although there are many other purposes defined by the FCRA, it states, in part, that a background screening report is permitted to be procured and used for “employment purposes.” This means that the information in the report can be used by the employer to evaluate a person for employment, promotion, reassignment or retention as an employee.

The FCRA protects individuals further by requiring that background screening reports are only obtained after the person 1) was notified of the employer’s intent to obtain a report, and 2) gave their permission for the report. It also protects individuals from identity theft or human error by requiring that the employer hold any final decisions not to hire, until the applicant has had the opportunity to dispute any information contained in the report. This is only applicable when information in the background screening report is the reason, or part of the reason, for the decision not to hire. The FCRA is the same law that gives us the opportunity to dispute inaccuracies on our credit report, when information contained in the report is the reason for being denied an extension of credit (credit card, mortgage, loan, etc.). It is fair and reasonable, but does place some burden of responsibility on the employer.

Zaeplex can help simplify the process by providing compliance assistance, including required documents, policy development and implementation. Please Contact Us by email or call (800) 222-5476 for more information.

Please see our Glossary of Terms - Compliance for further clarification of terminology.