7 Crucial Components About Employment Background Screening Every Human Resources Professional Should Know.

As a human resource professional, it is a given that applicants, employees, and management will come to you with all of their questions, and expect for you to know the answers. While you may not always be able to provide them with the ideal solution to their problems, it is expected for you to at least know the labor laws surrounding their concerns. This can be done by familiarizing yourself with the 7 crucial components about employment background screening.

1) As with any organization procedure, a nondiscriminatory background screening policy is mandatory to deter any claims of discrimination brought against the organization.

The background screening policy will help employers with reducing claims of discriminatory treatment brought by applicants who have not passed the employment background screening process. The policy is meant to promote a safe workplace by breaking down processes that will be used to perform the background check. An example of this would be having the applicant complete the authorization form and then providing the employer with compliant notices.

Employers are protecting their assets which includes their employees and property by conducting background checks. It would set parameters for disqualification due to an adverse background check while confirming compliance with Federal and state regulations. A policy may be required if companies want to do business with the federal government.

By having a compliant policy, organizations will effectively limit their exposure to litigation and reduce operating costs by decreasing employee turnover.

2) The background screening policy should include the following sections:

  • The purpose of the policy, and a statement on why the organization conducts background checks
  • The scope of the policy, which should be designed to protect property and individuals the employee will come in contact with
  • Identifying responsibilities to decide which department will be implementing and managing the policy
    Sensitive positions, and additional searches specific to such positions
  • The hiring manager’s responsibilities when reviewing an employment background check
  • Retention of records (how records should be stored and how long they should be stored)
  • Legal compliance to ensure the organization abides by the Fair Credit Reporting Act (FCRA) and other federal and state laws

3) Compliance with the Fair Credit Reporting Act (FCRA) is imperative.

The Fair Credit Reporting Act (FCRA) was created in 1970, specifically to address issues regarding consumer credit. The FCRA’s previous purpose was to promote accuracy, confidentiality, and relevancy of information being reported on consumers. It was amended in 1996, and now its main purpose is to regulate the use of consumer report information and other background information received about applicants from consumer reporting agencies.

The FCRA is not just limited to credit reports. It also includes other information that has bearing on a consumer, including public records which include employment history, educational history, and driving history. A complete version of the Fair Credit Reporting Act may be found on the Federal Trade Commission’s website.

4) It is important to be conscious of Section 604E, Subsection 2 of the Fair Credit Reporting Act.

Section 604E, Subsection 2 of the Fair Credit Reporting Act states that employers are required to provide specific disclosures to the consumer, also known as the applicant disclosure and authorization form, before requesting an employment background report. Employers must disclose to the applicant that a background report will be procured to determine their suitability for employment.

  • Disclosure forms should specifically state that the report will be requested from a credit reporting agency
  • Disclosure forms and authorization forms must be separate from each other and independent from any internal hiring forms
  • Name and contact information of the credit reporting agency must be visible
  • Type of information that will be provided must be listed. An example of this would be credit and motor vehicle reports.

It is essential that the disclosure clearly and accurately discloses to the consumer that a consumer report including information about the character, general reputation, and mode of living may be obtained.

5) Employers must provide specific notices to applicants who are a subject of the background report.

The federal notice is called the FCRA Summary of Rights. This document explains the applicant’s rights under the Fair Credit Reporting Act. This must be given to each applicant nationwide.

There are additional state specific forms that employers must be aware of due to Ban the Box and Fair Chance Act laws:

  • California requires for employers to provide the California Statement of Consumer Rights and notice regarding background investigations. If you are requesting a credit report, the applicant must also receive the California credit disclosure.
  • The state of New York also requires state specific compliant documents. The first documents is a “State of New York” specific release form completed by the applicant. The second notice is called The New York Corrections Law Article 23-A, which has to do with criminal records being reported on New York residents, and obligations that an employer has when reviewing the criminal records of a NY resident.
  • It is also imperative that applicants residing in California, Minnesota, Oklahoma, New York and Maine are afforded an opportunity to check a box on the disclosure form stating that they would like to receive a free copy of the report conducted on them.

6) One of the most crucial sections of the FCRA is the Pre-Adverse/Adverse action process.

This process is also known as the applicant dispute process, which states, “If an employer decides to take adverse action in whole or in part on information contained in the consumer report, the employer must take the following actions: Send the applicant a copy of the report procured along with the pre-adverse action letter, this letter states that adverse information has been reported and the subject of the report has the opportunity to dispute the information with the organization that provided the results. The applicant must also receive a copy of the FCRA “Summary of Rights” stating their rights under Federal Law. After 5 business days have past and no re-investigation is needed then the adverse action letter is sent and the applicant is no longer considered for employment with your company.”

7) There are a few things to consider when conducting lawful employment background checks.

More than half of the disclosure and authorization forms used are guilty of violating federal law. The most common violation is a waiver by the consumer of his or her rights, not allowing them specific notices, or their rights if the employer decides not to hire them based on the background check.

There are steps employers can take to recruit the highest quality applicants:

  • First, is placing signs at your business disclosing that the organization conducts background checks on all applicants, preferably in a place where applications are completed.
  • Second, is placing notices and disclosures on your organization’s website. This will lead to fewer undesirable applicants attempting to gain employment with the organization.
  • Next, if your business posts jobs on the internet or in the newspaper, disclose in the announcement that hiring is contingent on passing a background check. This will deter undesirable applicants from even responding to the ad.
  • Lastly, if your organization employs temporary staff, be sure to check with your staffing organization to see if they have a background screening program in place. If they do not, find a temp agency that does perform screening.

Research Your New Hires!


Workplace Violence
One out of every six crimes occurs in the workplace and homicide is the second leading cause of workplace death in the U.S.

Education Falsification
National Credit Verification Service reports that 25% of the MBA degrees it verifies on resumes are false.

72% of shrinkage is due to employee theft.
34% of all job applications contain lies.
30% of small business failure is caused by employee theft.