With new background check legislation having taken effect during the last quarter of 2016, HR professionals are required to walk a tighrope of multiple state and federal requirements. The issue at hand is the ability for HR to effectively execute on employment practices, while maintaining FCRA compliance to privacy laws.
According to the Society for Human Resource Management research, approximately 50 percent of employers use credit checks during the job application process. Many employers view the check as an opportunity to determine a candidate’s judgment and ability to manage their “affairs”. However, there is certainly room for another interpretation of a person’s credit check. In fact, some argue that the credit check is typically irrelevant as an indicator of potential success on the job, especially those unrelated to anything having to do with the dealing of the company’s finances. There is a thought to be considered that perhaps a negatively impacting credit report is more of an indication of financial hardship, and not an indictment of their judgment.
As some companies move away from the practice, there is a growing list of states that have passed legislation preventing a company from using credit reports as a basis for hiring.
But for companies and states that remain committed to the practice, they must maintain compliance with the Fair Credit Reporting Act (FCRA) by offering applicants a copy of their credit report, along with an opportunity to correct errors on the report before the company can make any hiring decision on the candidate.
Criminal Background Checks
Criminal background checks remain the most popular type of screening in the hiring process. Various laws, and efforts from agencies like the Equal Employment Opportunity Commission, have sought to limit employers from asking candidates about their criminal records.
During an interview, HR personnel must be careful with the questions they ask. They cannot seek too much information, and they have to properly handle the information that they do receive. Many states have laws with specific restrictions on the types of inquiries a company may use in vetting a candidate. For example, many states restrict companies from asking about sealed or expunged convictions or about juvenile crimes.
The repercussions to a company’s non-compliance can have far reaching effects. Employers have to worry about FTC fines, EEOC violations, and litigation from applicants not hired due to their background check results.
Handling of Information Received
An additional concern for HR is the handling of the information they do receive. Not only must they maintain strict privacy laws, but they must also keep it, and/or dispose of it within compliance. The Fair and Accurate Credit Transactions Act (FACTA) Disposal Rule is a federal law that requires “any person who maintains or otherwise possesses consumer information for a business purpose” to properly dispose of this data.
Some information gathered in the process and used in employment decisions must be retained. Both state and federal laws mandate that the information be protected from unauthorized access, use, modification, or disclosure. Even the review of a candidate’s social media accounts to determine hiring potential can be a slippery slope.
How to Remain Compliant
We live in a world that has unprecedented access to information at the touch of a button. HR professionals are required to understand the technicalities of the law, as well as the compliance issues surrounding the handling of the information that they acquire in order to remain compliant and avoid costly penalty for failure to obey the laws.
Some companies use 3rd party vendors to provide background information, but the fact remains that the company is responsible for the types of inquiries, and the handling of the gathered. We have a technology today that streamlines your processes, while also maintaining strict compliance, including in the areas of credit and background checks.
We (Essium) are a leader in cloud-based onboarding solutions, shown in our revolutionary Xenqu platform. We’ve built an in-house integration for all your employment screening needs including a comprehensive criminal check, drug testing, education verification, employment verification, reference checks, credit checks, and DMV searches.
The most important thing our Xenqu HR Software Solution does in regards to background checks is establish a clear record of compliance from disclosure and consent through properly handling all adverse action steps. Being able to demonstrate a consistent and thorough methodology to record keeping and process is the only way to effectively combat the myriad of issues in this area. Not only is the whole process tightly integrated into Xenqu with built-in support for FCRA-compliant adverse action notices, Essium can offer significant savings over other providers.
Want to find out how? Contact us and request your free demo at www.essium.co.
Ben Olson is the Chief Technology Officer of Essium, a premiere software company that has developed a revolutionary, customizable, workforce management solution named Xenqu. Essium’s Xenqu Software leverages our Smart Content Technology to organize everything related to your workforce in one secure, digital file using the latest cloud-computing technologies and architectures.