Background Check Reports are Not Interchangeable

Jun 19, 2019
The Fair Credit Reporting Act (FCRA) is the federal law that regulates consumer reports, i.e., background check reports.  The FCRA has another purpose – the consumer lending protection law – but this article focuses on its regulations and their impact on background screening reports. The FCRA requires that consumer reports be obtained with proper consumer consent and for a permissible business purpose.  Permissible business purposes include the following (and many more): Employee Screening Volunteer Screening Resident/Tenant Screening Franchisee Screening Membership Screening Board of Directors Screening Client Screening Employee screening is the most regulated by the FCRA, and requires different consumer disclosures and authorization forms, as well as different service agreements to establish the employee screening account with the background screening company.  If your company or organization has a different type of background screening account, e.g., tenant screening or franchisee screening, it cannot use tenant screening or franchisee screening disclosures and products for employee screening purposes, or any other type of background screening purpose. When establi…

Equifax Revolutionizes What is a Soft Pull Credit Report

May 19, 2019
In an interesting move that leads the credit bureau industry, Equifax has made "soft pull" credit reports available for tenant screening purposes.  Of the three main credit bureaus, Equifax is the only credit bureau that provides the option of a soft pull tenant screening inquiry to the end-user, i.e., to the landlord, apartment or property management company. Unlike the other two credit bureaus, that only make available soft pull tenant screening inquiries directly to the consumer, Equifax provides the option to background screening companies who re-sell their credit report, to make soft pull tenant inquiries available to the end-user (landlord, apartment, etc.).   As an end-user (landlord), it is best to control the input, rather than allow the applicant to potentially compromise the results, by misspelling their name, date of birth or social security number.  However, Equifax does require that the background screening company obtain a new Equifax Subscriber Member Number, otherwise their tenant screening inquiries will continue to be hard pull inquiries. The difference between a soft pull and a hard pull credit inquiry is that soft pull inquiries have no impact upon a consumer…

DOL Seeks Comments on Joint Employer Proposed Regulation

Apr 15, 2019
The Department of Labor (DOL), in its first meaningful revision since 1958 to its joint employer regulation, announced a proposed rule to change how joint employer status is determined going forward.  This is of particular importance to the franchise industry, where franchisors strive to not be considered a joint employer. The DOL proposal has a four-factor test that evaluates whether a potential joint employer exerts control to: Hire or fire the employee Supervise and control the employee's work schedules or conditions of employment Determine the employee's rate and method of payment, and Maintain the employee's employment records. Included in the DOL proposal are examples that further clarify joint employer status.  One example in particular depicts Franchisor A – a global hospitality brand with thousands of hotels under franchise agreements –  and Franchisee B who owns one of the hotels as a licensee of A's brand.  Even though Franchisor A provides Franchisee B with a sample employment application, sample employee handbook, and other forms for operating the franchise, because the licensing agreement states that Franchisee B is solely responsible for all day-to-day oper…

Why Your Employee Screening Disclosure Must Be “Clear and Conspicuous”

Mar 13, 2019
Last month I wrote about the Ninth Circuit Court of Appeals' ruling in Gilberg v. California Check Cashing Stores, and the significant impact it may have on determining if an Employee Screening Disclosure and Authorization (D&A) form is compliant.  The possible consequences are so severe, I am writing about it again. The FCRA – Fair Credit Reporting Act – the federal law that governs employee screening – imposes a statutory fine of up to $1,000 per individual for technical violations of this law.  When class action lawsuits are filed, the law allows a five-year look-back period to see how many applicants applied (not just those who were hired) with incorrect disclosure forms. This is why these class action lawsuits for technical violations of the FCRA become theoretically so expensive, attracting predatory plaintiff attorneys who develop law practices that primarily pursue these cases.  This affects even smaller companies, as hundreds of people usually apply for any job posting, and class action lawsuits go back five years.  One hundred applicants represent a $100,000 fine… one thousand applicants, a $1 million penalty – devastating amounts for most small businesses. Further…
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