How You Use Background Checks Can Make a Big Difference!

How You Use Background Checks Can Make a Big Difference!

by Jeanne Knutzen | May 29, 2015

0 HIRING. EMPLOYEE SELECTION, Hiring.Best Practices, Legal Issues - Flexible Staffing

Your Background Checking Process Is Under Increased Scrutiny….

…..and some employers are already paying the price for processes that don’t line up with Fair Credit Reporting Act (FCRA) regulations.

Last November, staffing company, Aerotek and their parent company Allegis, received notification of a class action suit filed by employees claiming adverse impact stemming from Aerotek’s failure to inform them of the adverse employment action they were taking based on the results of a criminal background check. In this particular case, Aerotek removed an employee from an assignment with United Healthcare based on information obtained in a Criminal Background check obtained ten days after the employee had begun work.

In early April, 2015, Amazon Inc. received a similar notice of a proposed class action suit, accusing them and their staffing agency, Staff Management Solutions (SMX), for a similar issue – in this case failing to provide prospective employees with the results of a criminal background check before making decisions to assign them to an Amazon facility. In the Amazon case, the employee was denied the opportunity to begin work based on the results of a criminal background check that unfortunately contained false information.

Here’s the details:

In November 2013 Gregory Williams filled out an SMX form giving SMX the authority “to obtain his consumer report for employment purposes.” The form stated that if anything was found in the background check that could affect his employment, he would be given a copy of the report in addition to an explanation of his rights under the FCRA to dispute the accuracy of the report. So far so good!

Williams interviewed via SMX for a seasonal job assignment at Amazon on Nov. 30, 2013 and was immediately offered the assignment. He came into the SMX office on Dec. 2, and was told the job would start on Dec. 5, 2013.

In the meantime, SMX initiated a background check which showed that Mr. Williams had a felony conviction for cocaine possession which, according to Amazon rules, “disqualified” Mr. Williams working at Amazon. He was told of this disqualification, but was not given a copy of the adverse report or advised of his rights to contest its accuracy.

Mr. Williams believed this failure to follow FCRA mandates, violated his rights, and he initiated a class action lawsuit on behalf of himself and all applicants similarly treated in the last five years.

As a staffing company we know that background checks are commonly used by many of our client companies – particularly companies doing retail, manufacturing, or proiding healthcare services. We are typically asked to assign or not assign temporary staff to these employers using the same internal policies these client’s use to hire (or not hire) candidates for core employment.

We work closely with our clients in all situations involving placement decisions based on background checks, knowing that the EEOC has significant interest in avoiding any situation where there is disparate impact on a protected class of employees based on an unneeded element in the employment process.

Scrutiny under the Fair Credit Reporting Act mandates is a relatively new scenario for us, as until recently most of the FCRA based lawsuits have been based on some overlooked technical aspet of the law. For example, FCRA requires that the authorization to do a background check be “clear and conspicuous” – it must stand out from the rest of the application process. In the last 3 years, class action lawsuits have been filed against Whole Foods, Publix, Chuck E. Cheese, and Panera because their disclosure forms did not meet the stand alone requirement – in our minds a bit of a nit picky issue, easily fixed by keeping the “disclosure notices” separate from the application form.

The Aeroteck, Allegis, Amazon and SMX lawsuits on the other hand appear to go beyond technicalities and are signaling a new landscape in how the disclosure components of FCRA laws are likely to be enforced on the go forward.

Current Recommendations to PACE Clients…..

1. Make sure that in your application process, your disclosures and authorization documents are stand alone documents. Don’t intermingle these documents with your application form or other employment related documents.

2. Check out the full scope of your legal responsibilities under BOTH EEOC and FCRA requirements. Here’s the link to the EEOC website that discusses the employers role in conducting background checks

3. In your service agreements with staffing vendors, state clearly who will be conducting a background check and describe how you want that information used. Keep in mind that if an employee is denied the opportunity to be assigned to your company based on information discovered in a background check conducted by your staffing agency, both you and your staffing company are subject to claims of unlawful adverse impact. You cannot ask your staffing agency to make employment decisions on your behalf that are not legally defensible.

4. Make sure your staffing agency as a matter of policy and practice are complying with all FCRA administrative requirements

a. Find out if they are informing candidates of the possibility that an investigative report will be conducted and how it will be used – in particularly make sure they indicate there could be “adverse action” taken based on the discoveries.

b. Find out how they are informing candidates of an adverse action and their internal procedures for handling those scenarios. By law they are required to disclose the adverse report, provide a statement of the candidate’s rights to contest the accuracy of an investigative report, and instruction on how to contest that information . You need to make sure that your staffing agency follows all these steps.

5. Re-review any “across the board” policies regarding how candidates will be handled based on background check discoveries. “No arrest” policies are specifically precluded. “No felony” policies are suspect. Both you and your staffing agency are accountable to ensure that all employment actions are made in ways that do not discriminate against any class of protected class candidates based on factors unrelated to actual job performance.


This article was written by Jeanne Knutzen, the CEO and Founder of the  PACE Staffing Network, a full service staffing company focused on  delivering talent to the Northwest employer community. PACE regularly  uses third party professionals to conduct criminal background reports  on their client’s behalf and is committed to managing all steps of that  process in legally defensible ways – complying with FCRA regs and the  spirit and intent of EEOC guidelines.

While we cannot provide you with legal counsel we can provide you with basic information on how to work with your staffing agency on their background check policies and procedures. For personal consult, contact Jeanne at .

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