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The Fair Credit Reporting Act, Family Employers, And Background Checks

Approximately 50,000 job applicants participated in a class action lawsuit that accused 7-Eleven of violating the Fair Credit Reporting Act (FCRA).

According to documents filed in the lawsuit, the plaintiffs alleged that 7-Eleven violated the stand-alone disclosure requirement of the FCRA by including additional information in its consumer report disclosure to applicants and employees. This additional information included statements about state law, the background check provider, and a blanket authorization allowing the disclosure of information directly to 7-Eleven.

The lawsuit further alleged that 7-Eleven's failure to comply with the FCRA was "willful" because the organization had access to legal counsel and could have complied if they wanted to.

7-Eleven will pay $1,972,500 to the class of affected applicants to settle the lawsuit. The employer also agreed to begin complying with the FCRA's stand-alone disclosure requirement. Jennifer Carsen "7-Eleven pays out nearly $2M to settle background check allegations" hrdrive.com (Jun. 27, 2019).

Commentary and Checklist

Often, when hiring or promoting staff, family employers will order consumer reports, such as credit reports or criminal records, from a reporting company as part of the background check process. Anytime you do so, you must make sure to comply with the FCRA. For more information about complying with FCRA requirements, visit the Federal Trade Commission's website.

Although background checks are a good idea for each hire, some employers are subject to mandatory background checks pursuant to state law. Regulations vary from state to state, so check with your local counsel.

Here are some examples of employers who may be required, depending on the state, to have mandatory background checks, particularly a criminal record check, on employees before hiring them:

  • Hospitals and nursing homes
  • Mental health facilities
  • Home care agencies
  • Day care facilities
  • Child placement agencies
  • Substance abuse facilities
  • Any for-profit or nonprofit institution that provides care to children or vulnerable adults
  • Teachers and other school employees, including bus drivers
  • Peace officers and private detectives
  • Driver training instructors
  • Racetrack employees
  • Apartment managers and caretakers and/or
  • Residential mortgage originators.

Here are some additional background check best practices for family employers to follow to reduce liability:
 

   •     Eliminate blanket policies or practices that exclude people from employment because of any criminal record.

   •     Identify essential job requirements and the actual circumstances under which tasks are performed to determine the specific offenses that may demonstrate unfitness.

   •     Develop a detailed written policy and procedure for screening applicants and employees for criminal conduct based on an individualized assessment of: 1. the nature and gravity of the offense; 2. the time that has passed since the offense or completion of the sentence; and 3. the nature of the job.

   •     Record the justification for your policy and procedures, as well as consultations and research considered.

   •     Limit criminal record inquiries to records for which exclusion would be job-related and consistent with business necessity.

   •     Keep information about applicants' and staff members' criminal records confidential and only use it for the purpose for which it was intended.

   •     Train hiring managers on Title VII and its prohibitions against employment discrimination.

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