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3 Biggest Compliance Hurdles for Small Businesses

We’ve seen many large businesses paying huge FCRA settlements but small businesses can be caught in costly background check compliance traps as well. When screening employees the FCRA requires specific notifications, and disclosures along with authorization to begin a check. Finally, employers must follow adverse action procedures if they may not hire a candidate. While the federal rules are unchanging across the US, many cities, counties and states have additional requirements for compliance that must be followed to avoid fines and regulatory action.

1.    Notifications & Disclosures

When a company decides to background check a candidate they first must send them highly specific forms including a notification of the potential background check, and a summary of their rights under the FCRA. If the federal requirements were all that mattered to small business owners, the next step would be obtaining the authorization, but many states, counties, and even cities have specific regulations employers need to pay attention to.

For instance, in California employers would need to provide both the federal disclosures and a separate California disclosure required for background checks. There are also California requirements for what employers can include on an application, and when they can ask for criminal history. As SHRM reports, if that business operates in certain cities, like Los Angeles or San Francisco, there are even more ordinances business owners need to be aware of, like ban-the-box. It’s not just California that has special circumstances for background screening employees. Chicago and New York for instance both have additional requirements beyond the FCRA.

2.    Digital Authorization

Whatever state your do business in, after the disclosures have been sent employers must wait for the candidate to authorize the background check before proceeding further. HireSafe uses digital authorizations to ensure the candidates information is transcribed correctly, and to lessen the burden on the employer for retrieving, and providing that authorization to HireSafe. This means that until the authorization is completed, no background screening can occur.

Typical background checks take 3-5 days depending on whether supplementary information like court records are required. The report is then sent to the employer, and information sent to the candidate to review the record should they desire. Here, employers must follow FCRA requirements, along with state and local ordinances. These can include procedures such as an individualized assessment in California, a substantive review of the applicants record that determines if the record has “direct and adverse relationship with the specific duties of the job that justify denying the applicant the position.”

3.    Adverse Action

If there even may be a decision not to hire based on this information, employers must follow the final requirement under the FCRA and various state laws, the adverse action procedure. The first step here is to send notice to the employee advising that items in the background report may cause them not to be hired. They must be allowed to review a copy of that record and challenge any items that could be incorrect. Once adequate time has passed, employers can make the decision not to hire with a final adverse action letter. The requirements for employers federally under the FCRA, in every state, county, and city can get dizzying very fast. The great thing about HireSafe background screening is that we handle the compliance for you! Our online portal automatically provides the correct notifications and disclosures for your company. Candidates can fill in their own personal information via a link sent via text and email, including the digital authorization. Once the report comes back you can use the portal tools to send a notice of adverse action, and the final hiring decision. By using HireSafe you keep your company safe from bad employees, and from costly compliance nightmares.

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