Make sure your employee background checks do not get you sued

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Sometimes, predatory individuals try to take advantage of the legal system to harm business owners.  Whether it is an individual “slipping” and falling after a self-created hazard on your premises or fabricating some other violation of law, business owners can fall prey to sophisticated opportunists. It has been recently reported that an individual has made a career by threatening and filing lawsuits against numerous businesses for technical violations of the Fair Credit Reporting Act (FCRA) – to date, he has obtained nearly $250,000 in settlements for alleged violations. If you were unaware, the FCRA imposes a number of duties on employers who obtain background checks on applicants. 

If you perform background checks, please make sure you follow these requirements to protect yourself from liability:

  • Disclose in writing, in a standalone document, that you intend to seek a “consumer report” (credit report) or “investigative consumer report” (a report that investigates character and reputation). This document should be in plain English and easy to understand.
  • Inform the candidate of his/her right to request a complete and accurate disclosure of the nature and scope of the investigation.
  • Get the candidate’s written authorization before seeking the report. Make certain the candidate signs and dates the document. You must notify the candidate that you will be seeking the report at least three (3) days before you request the report.
  • Provide a written description of the individual’s rights under FCRA.
  • If you chose not to hire the candidate or terminate an employee based upon such a report, you must:
    • Notify the individual that you may decline an offer based upon the report’s findings or terminate an employee based thereupon.
    • Provide a copy of the report to the individual.
    • Wait five (5) days before making a final decision.
    • Send a final notice to the individual that you are not extending an offer of employment.

In addition to the concerns that a private individual may be able to sue a business for the business’ failure to follow the requirements under the FCRA, The Equal Employment Opportunity Commission (EEOC) has taken special attention to investigate whether an employer’s use of a background check has a discriminatory effect. This may give rise to additional financial penalties against a business.

Furthermore, although it is not yet the law in Nevada, many states have enacted legislation that prohibits an employer from asking about an applicant’s criminal history (commonly known as “Ban the Box” legislation). Gordon Law believes such legislation is likely to be proposed in Nevada in the 2017 Legislative Session and will continue to monitor this important issue.

You need to make sure that you hire the right staff for your business. Background checks can be valuable tools to help you vet applicants. It is vital that you remain attentive to the legal risks and requirements in conducting background checks. Gordon Law remains committed to assist you in these and all human resource concerns.

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