4 Basic Steps to FCRA Compliance:

Step 1: Must have Permissible Purpose

Your organization must have a Permissible Purpose for running the background check as defined under Section 604 of the FCRA (Fair Credit Reporting Act). The defined permissible purposes include, but are not limited, to Employment purposes.

Step 2: Disclosure & Written Consent

Before requesting a consumer or investigative report a Disclosure and Authorization is a required step under the FCRA. The Disclosure and Authorization form is the documentation used to obtain the applicant’s signed authorization to conduct the background check. This step is required before initiating a background check on any applicant. You must provide the applicant with a clear and conspicuous disclosure that a report may be requested. This must be provided in a separate document that does not refer to other subjects.

The applicant must receive the following documents before a background check can be conducted:

  • Disclosure and Authorization form (to be signed and returned by applicant)
  • Summary of Rights Under the FCRA

Step 3: Pre-Adverse Action Documents

Any decision made upon the results of a background report that adversely affects a current or prospective employee for employment purposes results in an adverse action.

If a consumer report provides information that will “based in whole or in part” negatively influence the employment opportunities of an applicant you must do all of the following before an adverse action is taken:

  1. Provide the applicant a letter explaining the conviction or adverse information.
  2. Provide the applicant a copy of the completed report.
  3. Provide the applicant a copy of the FCRA.

The pre-adverse action process allows the applicant the chance to dispute the negative information contained in the report. The employer needs to allow a reasonable amount of time (typically 5 days) for the applicant to respond before a final decision is made or adverse action is taken.

Step 4: Adverse Action Document

If you decide to take adverse action based in whole or in part on the information revealed in the consumer report, you must do the following:

  1. Provide the applicant a letter explaining this process. The final decision to deny employment based on the results of the background check is disclosed in this notification.
  2. Contained within the letter it is stated that “the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the applicant the specific reasons why the adverse action was taken.”

Pre-Adverse and Adverse Action documents provide the applicant the opportunity to dispute information provided in their report that they believe is erroneous. The steps were designed to protect applicants from mistakes stemming from human error, mistaken identity and outdated information. Both of these letters must include contact information for your background screening provider in case the applicant has any reason to question the background screening results. Valley Track provides samples of both of these letters to assist you with compliance.

"Valleytrack is an amazing company to work with! They make my job a lot easier. Their customer service is top notch, in a time where good customer service seems to be a dying breed. I get my background reports in days and if I have a question about anything I receive an e-mail or call back immediately – often within an hour! I highly recommend working with them - you won’t be disappointed." - Lenore O.

Employee Pre-Screening Resources