​Study Shows Employers Paid Millions For Improper Screening​

October 22, 2019
Every employer is responsible for background screening applicants, contractors and volunteers. Not following federal laws during this process can be costly.
Backgrounds Online | October 22, 2019

Every employer is responsible for background screening applicants, contractors and volunteers. Not following federal laws during this process can be costly.

Lawsuits For Violations Of Background Check Laws

A report produced by the Benefits Pro website discussed fines that have been levied against employers for improper background screening practices. The majority of these fines came from class action lawsuits, which can include a large number of plaintiffs. Employers that do not follow laws established by the Fair Credit Reporting Act (FCRA) and state or local government agencies could be required to pay significant sums.

According to the Benefits Pro report, employers are sued for mistakes that could easily be avoided. Three of the most common were:

Failure to obtain authorization. Background checks are an essential part of every employer’s due diligence process. An organization must first disclose their intent to conduct a background screening and obtain consent. Until a person provides written authorization, a background screening cannot proceed. Learn more.

Failure to follow the FCRA-mandated adverse action process. A background check may contain information that causes an organization to consider not hiring a candidate. Before denying employment, the employer must send a pre-adverse notice and give the recipient time to dispute. If no dispute is filed, then the employer may complete the process by sending an adverse notice. Learn more.

Failure to follow state laws. Most states have their own laws that cover employment and hiring practices. They include Ban the Box and other Second Chance policies, Anti-Wage Discrimination laws and more. Not following them can result in lawsuits and fines.

Cost To Employers

The Benefits Pro article utilized a tracking tool and determined that within the last ten years, employers have paid over $174 million in damages for violating employment-related laws. It also concluded that more than 40 employers have been fined $1 million plus for violations. Notable payouts included:

· Target Corp. was fined $8.5 million.
· Uber Technologies was fined $7.5 million.
· Amazon.com Inc. was fined $5 million.
· The Home Depot Inc. was fined $3 million.
· Wells Fargo & Co. was given one of the largest fines for violations - $12 million.

Ensure Compliance When Background Screening

Fortunately, it’s easy to avoid violations and therefore lawsuits and fines. A great way to help accomplish this is to work with a Consumer Reporting Agency that is accredited by the Professional Background Screening Association (PBSA), which was formerly the National Association of Professional Background Screeners (NAPBS). CRAs provide sample compliance forms, educational resources and background checks that only contain current, accurate and reportable information.

Backgrounds Online offers sample compliance forms in our convenient Resource Center. We also provide sample pre-adverse and adverse notices. If a consumer files a dispute, resolving it becomes our top priority. Our team excels at keeping up with laws that affect our clients wherever they operate. We also provide a variety of educational resources through this blog, Education Center and monthly Newsletter.

When bringing on employees, contractors or volunteers, make sure you are compliant with all relevant laws. We recommend maintaining written screening policies that detail when and how you will run background checks, what you are looking for in the results and how you will proceed if you encounter adverse information. When you’re ready to get started, please contact us. Every member of our processing team earns their FCRA certification, is highly trained and ready to assist you Monday through Friday from 5am to 6pm PT.