Most job seekers are familiar with the basics: Wear a clean shirt, extend a firm handshake, and don’t ask about vacations in the first 10 minutes of the interview. But these days more businesses are digging deeper. Tulsa-based HireRight Solutions is a background screening company that thousands of employers use to check out current employees and people applying for jobs. When it comes to Fair Credit Reporting Act compliance, the FTC says HireRight Solutions got it wrong by not using reasonable procedures to ensure the accuracy of the information it was selling. The upshot: a $2.6 million civil penalty, the second-largest ever in an FTC FCRA case.
The background screening reports that HireRight Solutions sells are “consumer reports” under the FCRA. How so? We’re leaving out some of the legalese, but the short answer is that they include information "bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility” for credit, insurance, employment, or other purposes authorized under the FCRA. (Yes, that’s the short answer.)
Companies that sell or provide those reports are “consumer reporting agencies” under the statute. (Just as an aside, the law uses the word “agency,” but these are private companies we’re talking about — not agencies like government agencies.) Under the FCRA, consumer reporting agencies have a legal obligation to follow reasonable procedures to assure the maximum possible accuracy of the information the reports contain. That's where the FTC says HireRight Solutions didn’t get it right.
According to the complaint, the company didn’t take reasonable steps to make sure the info in the reports was current and reflected updates, like the expungement of criminal records. The FTC says that sometimes the reports included multiple entries for the same offense. What's more, some reports listed convictions for people other than the applicant or employee — even though the person with the criminal record had a different middle name or date of birth. If a tomato soup stain on a tie can torpedo a job applicant’s chances, imagine the effect of a wrongly reported rap sheet.
But the violations didn’t end there. The FCRA gives people the right to know about information reported to potential employers and sets up mandatory procedures people can use to challenge information they believe is inaccurate. According to the complaint, the company failed to live up to the FCRA’s requirements that it turn over files to people who ask for them, didn’t conduct a reasonable investigation when people disputed the accuracy of information, and didn’t give people written notice of the results of investigations. For example, the FTC alleges that HireRight Solutions had a big backlog because it didn’t hire enough staff to respond to people’s concerns about inaccuracies. The complaint also charges that the company set up unreasonable hoops people had to jump through to exercise their rights under the FCRA.
In addition, the FCRA has special requirements for consumer reporting agencies when their reports contain public record information that’s used for employment purposes. If that info is likely to have an adverse effect on a person’s ability to get a job, the law gives companies like HireRight Solutions two choices: 1) notify the person anytime public record information is being reported; or 2) maintain “strict procedures” designed to ensure that reported public record data is complete and up to date. The complaint charges that HireRight Solutions had a system in place for notifying people, but it was too clunky to be of much practical use. The FTC also charged that the company didn’t maintain the strict procedures the law requires. In addition to the $2.6 million penalty, the stipulated order puts provisions in place to change how HireRight Solutions does business going forward.
Interested in a refresher on the dos and don'ts of using reports in the hiring process? Read Using Consumer Reports: What Employers Need to Know, available on the BCP Business Center's Credit Reporting page. We also have information especially for your HR team.
If you're looking for a job, learn more about your rights under the FCRA by reading Employment Background Checks and Credit Reports and watching a new video from the FTC: