In a case that should send shivers through background check companies, particularly in Connecticut, a federal district court judge recently ruled that a job applicant could proceed to trial with her claims that two background check companies violated in the Fair Credit Reporting Act when they reported that she had been convicted of a crime (when she allegedly had not).
The case, Adams v. National Engineering Service Corp. (download here) has a detailed and, at times, compelling recitation of a background check that appears to have gone awry but also of a background check company that appears to have done quite a bit to try to alleviate the situation.
Nevertheless, the Court found that what the background check company did to try to comply with the applicable law may not have been enough. (The court has sent the matter on to a jury for a determination.) Other portions of the opinion address the issue of when the background check company needs to report the negative information to the job applicant directly.
Another portion of the case answers the sticky question of whether a background check company needs to provide notice of such negative information to the applicant directly. Relying on 15 U.S.C. 1681a(k), the court answers the question "yes", finding that the company’s reporting of such information to a potential employer is an "adverse action" that requires such notice.
I’ve previously discussed background checks before. For companies that engage in background checks (and the employers that use them), compliance with FCRA isn’t easy. Add a hodgepodge of various state laws and it is a compliance issue waiting to happen.
Nevertheless, reviewing and auditing your current policies and procedures may be the best step that employers can take from this case. As this case illustrates, no detail about the FCRA will be too small.