Accurate Blog

The Cost of Non-Compliance: Background Screening Lawsuits on the Rise

Posted by Michael Jarvis on Feb 2, 2014 5:36:48 AM

The U.S. Equal Employment Opportunity Commission (EEOC) announced a large settlement this year after an investigation of a global employer’s background check policy revealed a violation of Title VII of the Civil Rights Act of 1964. The employer, agreed to pay $3.13 million and provide job offers and training to applicants who were deemed ineligible for hire under the company’s old policy. The employer’s former policy excluded applicants from permanent employment if they had been arrested pending prosecution, but had not been convicted of any crime. The EEOC argued that African Americans have a higher rate of arrest than Caucasian Americans and found that a disproportionate number of African Americans were denied employment as a result of the policy.

The investigation reveals one of many concerns regarding background screening, the Fair Credit Reporting Act (FCRA) and EEOC compliance. The EEOC has long held that employers shall consider various factors in making hiring decisions as it relates to the background check, including the time that has passed since the conviction, the nature of the offense and the nature of the job being sought. Some employers have continued to follow hiring processes that could potentially be deemed discriminatory. The EEOC has taken notice and has become more active in, and attentive to, the background check industry and the employers’ use of criminal records in hiring practices, including but not limited to, arrest records, criminal convictions, and blanket background screening policies.

Learn from Other’s Oversight An increase in the use of criminal background checks in hiring decisions out of security and safety concerns has drawn negative attention to the background screening industry from more than the EEOC. A recent AP article revealed an overlooked circumstance of mistaken identity and unknown identity theft when screeners relied solely on database information to report criminal records. Lengthy lawsuits, costly settlements and heavy penalties plague employers and background screening companies that have policies in place which are non-compliant with the FCRA. A background screening company featured in the article was ordered to pay $28.4 million in a class-action lawsuit to settle allegations of improper notification of background checks and non-compliant dispute processes.

Another background screening company agreed to pay $20.7 million in a class-action settlement for a non-compliant contemporaneous notice process and a non-compliant dispute procedure. The company failed to send contemporaneous notice for criminal database “hits” to the consumer “at the time” of the employer’s review of the criminal records. By the time consumers received the contemporaneous notice; they had already been fired or not hired due to the negative results provided to their employer. The consumers also claimed that the company’s dispute procedures often caused the reinvestigation of disputed information to take longer than the FCRA’s 30-day requirement.

In one other case, background screening procedures used by a large global employer opened up a punitive class action lawsuit in early 2012. The company allegedly ran background checks on employees without proper disclosure and authorization and failed to provide employees copies of their completed background check prior to taking adverse action against them which violates basic requirements under FCRA.

Avoid Unnecessary Litigation Ongoing education and implementing companywide best practices can help you avoid lawsuits like the few mentioned above. When selecting and contracting a Consumer Reporting Agency (CRA) to perform background screenings on your behalf, protect yourself and your employees by ensuring that the CRA has strict FCRA compliance policies and procedures and a compliance department that stays up-to-date on legal changes and updates. Check out some of Accurate Background’s past articles and White Papers for an overview of FCRA regulations and best practices to avoid litigation:

Protect your company and your employees Accurate Background takes every measure to ensure our best practices are compliant with the FCRA and with state-specific laws and restrictions. We work closely with our retained counsel and our in-house compliance department to ensure that, not only are our practices are compliant, but that our clients are proactively informed of legal changes that will effect compliance with their background screening policies. Accurate Background provides industry White Papers and ongoing Legislative Updates to educate your organization on changes to state, federal, and industry compliance. Look for ourupcoming free webinar in March 2012 on FCRA compliance, the EEOC investigations and best practices to protect you and your company from negligent hiring and non-compliance lawsuits.

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