Employers Face Class Action Lawsuits for Online Applications in Violation of Fair Credit Reporting Act

In a response to a lack of communication during the online application process, the National Law Forum reports that an increasing number of job seekers are suing employers who are in violation of the Fair Credit Reporting Act (FCRA).

In a recent class action lawsuit against K-Mart, prosecutors say that the online applications that they filled out for positions at K-Mart are in violation of the FCRA. The retailer allegedly utilizes buttons on their online applications that either say “decline” or “accept.” These buttons are the only means offered by K-Mart to obtain an applicant’s consent to submit to a background. Apparently, this simple button click is not the correct way to obtain a background check authorization from an applicant.

According to the Fair Credit Reporting Act, in order to provide full disclosure to a job applicant:

a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.

The simplicity of a “decline” or “accept” button does not constitute a written authorization, prosecutors say. Employers who utilize online job applications argue that under the Electronic Signatures in Global and National Commerce Act (E-Sign), electronically authorizing background checks are permitted. However, E-sign only applies to consumers or customers, not job applicants.

 

HR Professional Opinion:

(The comments below are part of First Contact HR’s opinion column where we offer the writer’s opinion on this post’s specific topic and thus should not be taken as legal advice.)

While it is certainly okay to obtain a background check authorization from an online job application, it is important to keep in mind that the authorization must:

  1. Provide a clear and conspicuous disclosure in writing to the applicant that a consumer report for employment purposes will be procured;
  2. The consumer has authorized in writing (such as e-mail, mouse click “yes” )the procurement of the report, and;
  3. The electronic authorization must be “capable of being retained and accurately reproduced for later reference for the benefit of the consumer. Learn more

Regarding the K-Mart matter, it appears the company failed to satisfy the FCRA requirement stated above by requesting applicants merely to click a mouse button labeled “accept” or “decline.”

Although an electronic signature may prove to be a legally valid authorization to conduct a background check (under the FCRA), job applicants may be reluctant to accept the electronically-signed authorization and may require an actual hardcopy signature. To be safe, it might be prudent to stick with hardcopy signatures that are stored electronically with respect to background check authorizations.

 

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You Ask, We Answer

Each week we will be answering common questions we get on background checks, drug testing and other HR industry practices. Got a question? Ask us at info@FirstContactHR.com

Question #3: Why do I need a “background screening” firm? Isn’t most information about a person’s background online?

Contrary to popular opinion, criminal and other searches are not ‘available online. Very few county court records are accessible online, and then only with special access procedures and fees. Most of the advertised sources of online criminal history do not come directly from the courts, but is retrieved from databases that are not always accurate or current.

Always ask if their searches are direct from the originating source or are they simply pulled from a purchased database. To learn more about internet searches, read a previous post on Internet background searches.

For more questions and answers, visit www.FirstContactHR.com and just Ask!

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You Ask, We Answer

Question #2: What does the Fair Credit Reporting Act have to do with a criminal background search?

The FCRA governs all background searches, not just credit reports. The Act defines permissible purposes, how the information is handled, what procedures and documentation must be followed, and even defines the procedures for when an applicant is denied a job based on the results. There is a great deal more to know about the FCRA, and we recommend all personnel responsible for hiring employees be aware of the impact this act has on your employment decisions. For more information on the FCRA, visit: http://www.ftc.gov/os/statutes/fcrajump.shtm

For more questions and answers, visit www.FirstContactHR.com and just Ask!

Each week First Contact HR answers common questions on background checks, drug testing and other HR industry practices. Got a question? Ask us at info@FirstContactHR.com

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Internet Background Searches – Should YOU Use Them?

It’s no surprise that basically anyone and everyone can conduct a simple background check on whoever they like. With companies like EasyBackrgoundCheck.com and nationally-recognized BeenVerified.com, individuals and companies can input basic information about a person and obtain “background” information on that individual.

While it is fine for people to use internet background check services like these for personal use, it is important to realize that these companies are simply “public record aggregators,” and thus not a replacement for traditional pre-employment background screening or private investigative services.

Internet aggregation services are a cheap and quick way to get a bit of information on a stranger or person of interest, but are certainly not acceptable for hiring purposes. Under the Fair Credit Reporting Act (FCRA) information that is supplied by a 3rd party vendor for hiring purposes needs to be both accurate and current (not older than seven years). Furthermore, companies and organizations that are in fact going to use the information obtained from these internet aggregation sources for employment purposes, must obtain the applicants consent before doing so. In the case of hiring, the job applicant must provide an organization with signed written consent for performing an internet background check.

Companies and organizations that have written consent from applicants to do a background check still need to make sure that the information is accurate – in many cases, the information is not. BeenVerified.com for example even states: “we do not represent or warrant that the results provided will be 100% accurate and up to date.”

More often than not, those conducting internet background checks via aggregation services are not able find the right person to investigate either because their name is too similar to another person (think, “John Smith”) or the person has taken steps to protect their internet privacy (think, “do not call list”… but more like the “do not internet background check me online list”). How could an individual do this without countless hours spent searching online? You might ask.

Well, there are a number of ways individuals can hide, block and even remove information about them so that internet background check websites cannot find them. Read this article by BGR.com explaining all the ways you can put yourself on the “do not internet background check me online list” for all the major internet aggregation sites such as BeenVerrified.com.

The best practice available for a company or organization that is looking to conduct background checks on job applicants and employees is to use a trusted company such as First Contact HR. To see what background screening services First Contact HR can provide to individuals and companies, Visit: FirstContactHR.com

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Steps for Employers on complying with the FCRA when Conducting Internet Background Checks

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The Federal Trade Commission (FTC) recently gave an official thumbs up for the use of Internet background checks on job applicants from search engines and social media sites such as Facebook, Twitter and LinkedIn.

However, conducting Internet background checks comes with some risks. Employers and service providers utilizing Internet background checks must comply with the Fair Credit Reporting Act (FCRA), which is charged with regulating the use of consumer information.

To make sure you are complying with FCRA regulation and to minimize the risk that come with using the Internet for conducting background checks, consider the following steps:

  1. Consult with a reputable human resource professional and/or attorney to develop a written policy and fair, non-discriminatory procedures designed to locate information that is a valid predictor of job performance. Employers should focus on objective criteria.
  2. Consider the use of Internet material later in the hiring process to avoid suggestions or claims that the information was used to discriminate. A more conservative approach would be to use the Internet only after a conditional job offer has been made.
  3. Take steps to ensure that the information uncovered online does not adversely impact persons in a protected class based on prohibited criteria such as: race, creed, color, nationality or age (40+). All of these and other protected criteria of applicants may be revealed inadvertently by an Internet search.
  4. Avoid accessing information protected by state law that is considered legal “off duty” conduct. Many states have specific statutes that protect applicants and employees who engage in certain lawful activities, such as tobacco and lawful product use.
  5. Request job applicants to complete a consent form to enhance your legal protection, and perform the Internet search only after a job offer is made, contingent upon completion of a background check that is satisfactory to the employer.
  6. Take steps to have a written policy in place. For employers who recruit at colleges, there is a growing trend to require employers to notify students in advance as to their policy for searching the Internet for an applicant’s online identity.
  7. Avoid use of any fake identities or engage in “pretexting” to gain access to online information. For instance, a recruiter should not be tempted to use a co-worker, friend or family member’s Facebook account to gain access to information about a job applicant.
  8. Access and use only relevant and permissible information for making employment decisions. When using in-house staff to conduct Internet searches, ensure they are trained in the non-discriminatory use of online information, knowledge of the job description, and use of objective methods that are the same for all job candidates for each type of position.

Employment background screening reports can include information from a variety of sources: credit reports, past employment and salary history from employers, federal and county court records – and these days, even social media.

But regardless of the type of information contained in a report you use when making hiring decisions, the rules remain the same. Companies that provide reports to employers, and the employers using those reports must comply with the Fair Credit Reporting Act.

For the full article and for more articles like these, please subscribe to the First Contact HR Newsletter.

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