Background Check for Employers: What You Can Learn From the Walgreens Settlement

The Walgreens Background Check Settlement has cast a spotlight on compliance in conducting background checks for employees. This legal dispute underscores the intricacies of adhering to the Fair Credit Reporting Act (FCRA), particularly regarding adverse action procedures during the hiring process. In a climate where employers increasingly rely on criminal background checks for employment, understanding the nuances of FCRA regulations is not only advisable; it's essential.

This article delves into the Walgreens lawsuit, dissecting the FCRA violations that led to the case. It serves as a cautionary tale, offering valuable insights for employers aiming to navigate the complexities of lawful credit- and criminal background checks.

For employers who seek further knowledge on FCRA guidelines and background checks, resources like "Background Checks for Employers: Everything You Need to Know" and "FCRA Compliance: An In-Depth Guide for Employers" provide comprehensive information. These tools are invaluable in fostering an environment of compliance and integrity within your organization's hiring practices.

A Violation of FCRA Requirements

Walgreens faced a class action lawsuit settlement due to allegations of FCRA non-compliance in their job applicant background screening process. The main issue in the lawsuit was that Walgreens allegedly did not follow FCRA guidelines correctly, which are meant to protect consumers during background checks. These allegations suggested that the company didn't respect the rights of applicants and employees, potentially affecting their job opportunities unfairly.

Specific Allegations Against Walgreens:

1. Failure to Provide Proper Notice: Allegedly, Walgreens did not clearly and adequately inform applicants about using background checks in its hiring decisions.
2. Inadequate Authorization Forms: It was suggested that the consent forms used by Walgreens were not in line with FCRA standards.
3. Insufficient Adverse Action Procedures: Walgreens was reported for not correctly notifying applicants whose background reports had a negative impact.

The Federal Trade Commission (FTC), which enforces compliance with the FCRA, actively investigated these claims. The FTC's involvement was crucial in settling with Walgreens, showing the importance of following federal regulations when conducting employment screenings.

Understanding Adverse Action Notices

The Fair Credit Reporting Act (FCRA) plays a critical role in how employers use background checks to make employment decisions. An adverse action occurs when an employer decides against hiring an applicant based on their background check results. Compliance with the FCRA is mandatory to ensure fair and transparent hiring practices.

What Constitutes Adverse Action?

Adverse action in employment can include:

• Not hiring a job applicant
• Withdrawing a job offer
• Terminating an employee
• Reassigning or demoting an employee

When background check findings influence such decisions, specific FCRA requirements come into play.

FCRA Requirements for Taking Adverse Action

Employers must follow a two-step process when considering adverse action based on background check results:

1. Pre-Adverse Action: Before making a final decision, the employer must provide the applicant with:

• A copy of the background check report
• A copy of "A Summary of Your Rights Under the Fair Credit Reporting Act" – a document issued by the Federal Trade Commission
• Sufficient time to review and dispute any inaccuracies in the report

2. Adverse Action: If the decision not to hire remains, employers must then send an adverse action notice that includes:

• Notification of the adverse decision.
• The name, address, and phone number of the consumer reporting agency that supplied the report.
• A statement that the consumer reporting agency did not decide to take adverse action and cannot provide specific reasons.
• Notice of the individual's right to dispute the accuracy or completeness of any information in the report and their right to obtain an additional free report from the agency within 60 days.

Elements of an Effective Adverse Action Notice

An adequate adverse action notice is clear and comprehensive, featuring:

• The reason for adverse action when possible
• Instructions on how to obtain a free credit report
• Details on how to contest inaccuracies in the report

By adhering to these guidelines, employers can mitigate legal risks while maintaining fairness in their hiring processes. Failure to comply can lead to serious consequences, which will be discussed next concerning potential legal repercussions and penalties.

Remember, supporting information for your background check services for employers is always available at the backgroundchecks.com dedicated compliance area, where you can access sample forms regarding disclosure, authorizations and a detailed list of applicant rights. You can also remain updated via the resources page, which has ample information and guidance.

Legal Action Against Employers

Employers can face two types of legal action if they fail to follow FCRA guidelines: class action lawsuits or individual claims. These lawsuits usually involve the following violations:

• Failure to Obtain Proper Authorization: Employers must obtain explicit written permission from the applicant or employee before conducting a background check.
• Inadequate Disclosure: Employers are required to provide a clear and separate notice stating that they will run a background check.
• Non-compliant Adverse Action Procedures: If an employer takes negative action based on information found in a background check, they must follow a specific two-step process to inform the individual and allow them to dispute the findings.

Regulatory Penalties

When employers fail to comply with FCRA requirements, regulatory agencies like the Federal Trade Commission (FTC) can step in and impose penalties:

• Investigation and Fines: The FTC has the authority to investigate employers and impose fines for FCRA violations.
• Legal Settlements: In some cases, companies may be required to settle with regulatory bodies, resulting in financial payments and mandatory changes to their operations.

Importance of Record-Keeping

Maintaining thorough documentation throughout the background check process is crucial for demonstrating compliance:

• Record of Authorization: Keep copies of all written authorizations from applicants or employees.
• Disclosure Notices: File all notices provided to individuals about the background check separately from other documents.
• Adverse Action Records: Maintain detailed records of negative actions taken based on the background check, including the notifications sent to the individual.

By prioritizing FCRA compliance and keeping meticulous records, employers can protect themselves from potential legal risks related to their background check procedures.

Stay Compliant With the FCRA

Backgroundchecks.com can help employers navigate FCRA compliance. Our commitment to following the law is clear through robust FCRA-compliant screening services, essential for responsible hiring.

Key Features of Compliance:

• Authorization and Disclosure: backgroundchecks.com makes it easy for employers to obtain proper authorization from applicants before conducting a background check.
• Clear Communication: The platform ensures transparent disclosure processes so that applicants understand the purpose and scope of the background checks.

The range of screening solutions offered by backgroundchecks.com is extensive, catering to different industries and specific job roles:

• Tailored Solutions for Industries: Customized packages are available for sectors such as Staffing, Construction/Manufacturing, Retail, and Volunteer Organizations.
• Services for Specific Roles: backgroundchecks.com provides targeted insights for HR Manager and Operations Manager positions, helping employers make informed hiring decisions.
• Flexible Screening Options: Packages like US OneSEARCH and County Level Criminal Search offer different levels of screening based on business needs.

By using these solutions, employers can confidently conduct thorough background checks while ensuring strict compliance with FCRA guidelines.

The Walgreens Background Check Settlement is a valuable lesson for employers. It shows how important it is to follow FCRA regulations when conducting background checks, ensuring that hiring practices are ethical and legal.