In theory, Artificial Intelligence (A.I.) gives companies the ability to pass human recruiting tasks on to automated tools. Not only does this delegate the prescreening process to a robot, it can also prevent would-be candidates from even becoming applicants. This...
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Best Practices for Disclosure and Authorization Forms
Background screenings are governed by strict federal laws which include the Fair Credit Reporting Act. At The Applicant Manager, we want to understand these laws so you can reduce your legal liability. Thanks to one of our partners, Verified First, for sharing their insight with us.
Because background screenings are closely regulated by the Fair Credit Reporting Act (FCRA), it’s important to ensure compliance. One of the most common screening mistakes employers make is not providing a legally mandated disclosure to the candidate and obtaining written consent to conduct a background check. Many companies have suffered costly lawsuits for not complying with these requirements.
If an employer fails to meet FCRA requirements, applicants can allege statutory FCRA violations without suffering damages. If an employer is found in violation of FCRA requirements, each applicant provided the disclosure form may seek recovery, frequently through Class Action lawsuits. Additionally, punitive damages for willfully violating the FCRA may also apply.
Requirements for Employers
When an employer conducts background reports, they must follow all FCRA regulations. Before running a background screening report on a candidate, the employer must complete the following:
- Obtain Authorization. Written permission must be obtained from the candidates before any background searches are run. This authorization may be printed or electronic.
- Provide Disclosure. Applicant must be told, in writing, that information obtained may be used for a hiring decision. This document may be printed or electronic, but according to section 604(b)(2) of the FCRA, it must be “clear and conspicuous” and must be a “document that consists solely of the disclosure.”
Best Practices for Employers
These requirements may seem fairly straightforward. However, there’s a few common mistakes employers make in providing a legal disclosure form. For example, in recent years, a multi-million-dollar lawsuit was filed against Home Depot. The plaintiff claimed that the disclosure form had “extraneous provisions” that confused him about the nature of the background check and his rights under the FCRA. This is one of many lawsuits filed because of issues with the disclosure form.
To mitigate liability, it’s important to understand the guidelines from the Federal Trade Commission (FTC), which enforces FCRA regulations. The FTC recommends the following best practices with the disclosure form:
- Keep the disclosure and authorization form as separate documents. Failing to comply with the stand-alone disclosure requirement has been the cause of many class action lawsuits.
- Don’t include a liability waiver. According to