|
In the wake of the worst U.S. financial crisis since the Great Depression, Congress passed and the President signed into law sweeping reforms of the financial services regulatory system through the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The CFP Act established the Bureau of Consumer Financial Protection (CFPB or Bureau) within the Federal Reserve System (FRS) with rulemaking, enforcement, and supervisory powers over many consumer financial products and services, as well as the entities that sell them.
What transpired following the financial crisis meltdown was instability in the markets and job loss. To help boost confidence in oversight and minimize additional unemployment due to errors on credit reports and erroneous consumer reports many updates took place. These sweeping changes in the laws and regulations surrounding hiring have now been in place for some time and all companies large and small should already be aware of these changes and should have implemented policies and procedures to meet these requirements. But, many companies seem unaware of the changes and many more have seemed reluctant to try to understand the changes. This attitude or lack of has cost U.S. companies millions and millions of dollars and have resulted in some of the largest class action law suits in terms of volume and size of financial settlements in sometime. So what are some of the hiring practices corporations across the U.S. are missing today? To start, not obtaining everything needed PRIOR to requesting a consumer report (credit report or background check) from a 3rd party consumer reporting agency for starters. Typically each employer must: Tell the applicant in writing that you may use information obtained in a consumer report for employment decisions. This must be in a stand-alone document that is NOT part of the initial application. Obtain written permission, in advance, from the applicant to request a consumer report for employment purposes. After receiving a consumer report on an applicant, many employers are either not aware of or up to date on what they are requirement to do next. If the employer decides to take adverse action against an applicant based in whole or even in part based on information contained in the consumer report, the employer typically must follow a multi-step process: At any time BEFORE taking an adverse action against an applicant, an employer MUST provide the employee with a copy of the consumer report it relied upon to make the decision and a copy of A Summary of Your Rights Under the Fair Credit Reporting Act (This is usually completed in what is commonly called a pre-adverse action notice letter.) If AFTER waiting the required time, it is determined the employer is prepared to take adverse action against the applicant, it must then prepare an adverse action letter and inform the applicant of the action either orally, in writing or electronically. This should explain that the report solely or in part was the basis for the decision and must provide the name, address and phone number of the consumer reporting agency that furnished the report. Additionally it must explain that the company that sold you the report did not make the hiring decision and the applicant has the right to dispute the accuracy or completeness of the report and may obtain a free copy from the reporting company for 60 days. Understandably, to increase employer awareness of the changes relating to background checks, just this March two large entities came together, the US Equal Employment Opportunity Commission (EEOC) and the Federal Trade Commission (FTC). Together, they have jointly issued informal guidance concerning common issues that are specific to both employers and employees during the hiring process. It is important to understand the rights and responsibilities of each. Please review the guidance of each as well as the Summary of Your Rights under the FCRA. EEOC & FTC Guidance - March 2014 - Background Checks - What Employers Need to Know? http://www.eeoc.gov/eeoc/publications/background_checks_employers.cfm EEOC & FTC Guidance - March 2014 - Background Checks - What Job Applicants & Employees Should Know? http://www.eeoc.gov/eeoc/publications/background_checks_employees.cfm A Summary of Your Rights under the Fair Credit Reporting Act http://www.datasourcecorp.com/summary-of-rights.html Finally, don’t throw away that background information just yet. Under EEOC rules you must keep personnel or employment records for the later of one year after the records were made or after personnel action was taken. Ultimately, the recent focus on employment law and hiring practices has stemmed from both the inability for applicants to quickly and easily correct errors on consumer reports to the slowness of companies to respond and implement policies around these new guidelines. If you have not reviewed and updated your hiring processes to reflect these changes, this would be the season to do so. Besides…..it’s the law. *This article has been provided as an information resource for the BSCAI and should not be deemed as legal advice or otherwise. Many of the forms required and discussed in this article can either be found under the sample forms tab on our website and/or are automatically generated within our online background screening platform.*
0 Comments
Leave a Reply. |
Archives |
