Loss Prevention & FCRA Compliance
Negligent hiring, negligent retention, and most recently negligent referral lawsuits have become a favorite of plaintiff attorneys. For example, if an employee assaults another employee, customer or anyone else in the course and scope of his employer’s business, chances are that the liability sits fair and square with the employer.
The situation is exacerbated if the aggressor has a history of like behavior. The assumption will be that the employer should have known about the previous behavior. In the absence of some very compelling evidence to the contrary, there is very little chance of convincing a judge and jury otherwise.
Time and again, employers hire bookkeepers and others with access to corporate assets without carrying out comprehensive background checks. They obtain temporary and “temp to perm” personnel from staffing agencies without making sure that the scope of the background screening meets their criteria. This often results in embezzlement and theft. In any of these circumstances the results can be catastrophic, resulting in the closure of the business, or in the extreme, the death of a fellow employee.
For a very small fee relative to the potential losses, employers should make sure they hire people who can not only do the job, but are of the character desired of employees in the organization culture. Remember: Good Character makes for Good Employees.
Many states are passing laws that reinforce or extend the federal FCRA, so you need to make sure your background screening company understands them all.
The use of credit reports is not the only type of inquiry restricted by the FCRA. The name Fair Credit Reporting Act is in itself a misnomer, since the act refers to any information provided by a Consumer reporting Agency (CRA) in connection with employment screening.
Before any screening can be conducted, you must have the applicant’s signed consent "on a form for the purpose", and if you decide not to hire because of a report from a CRA, you must follow FCRA Adverse Action procedures.
The fact that an applicant has a conviction is not a reason in and of itself not to hire under the FCRA. The conviction must be relevant to the job position. For example, a conviction for a bad check may render an applicant unsuitable for an accounts position but not for a job digging ditches.
These are just the basic requirements of the FCRA, but the ever changing state laws are adding to the complexity of screening and the need to ensure your provider is "keeping you on the straight and narrow" and providing guidance and assistance on a regular basis.