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The Ultimate Guide To Background Check Compliance

Compliance can cost industries billions of dollars. While the stakes aren’t always that high, it’s safe to say that losing money to fines hurts your financial bottom line. Even if money isn’t a factor, failure to comply impacts employees and business reputation and can decrease sales. The list of negatives for failing to comply could fill a library – assuming that the library hadn’t been shut down for being out of compliance. 

As an authority in your company, you must prioritize complying with state and federal regulations. And that’s especially true when considering background check compliance. Certain laws surround the data since background checks contain a candidate’s private information. You should be aware of five primary regulations and several specific to state, vocation, etc.

We’ve done the research, so you don’t have to. Here’s the ultimate guide to background check compliance. Make sure to favorite this article for easy reference.

Laws That Affect Employer Background Screenings

There are approx 180 laws that surround the hiring process. Luckily, they don’t all apply to background checks. Here are the ones you’ll need to know.

Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act was first implemented in 1970. It serves to ensure fairness, accuracy, and privacy of credit reports. As an employer, FCRA mandates that you ask permission to and explicitly state that you’ll pull credit. Furthermore, you have to provide your candidate with a copy of the credit report and specify what part of the report led to you opting not to extend a job offer to the candidate. Additionally, you must inform candidates when information on their report may lead to you declining a job offer. This is called a pre-adverse action letter, allowing candidates to appeal the adverse action. If a candidate disputes the information, you must pause hiring until the dispute is complete.

Americans with Disabilities Act (ADA)

The Americans with Disabilities Act, first enacted in 1990, penalizes employers that discriminate against disabled people. To that effect, employers can’t ask about medical history or make their decision based on a candidate’s disabilities. Another key factor is ensuring your workplace has adequate accommodations for disabled access—for example, a wheelchair ramp. ADA also impacts external communications. ADA compliance requires your website to pass ADA accessibility requirements. Photos must have captions, and web pages must be able to pass screen reading software, etc. 

Drivers Privacy Protection Act (DPPA)

The Drivers Privacy Protection Act, made legal in 1994 and also known as DPPA, limits the information states can provide to any person or entity regarding an individual’s driving history. This Act comes into play for Motor Vehicle Record, also known as MVR, checks. Here’s the catch for DPPA, it drastically varies by state; requiring you to research each to understand how DPPA impacts you. 

Freedom of Information Act (FOIA)

The FOIA first became law in 1967 and mandates that government must honor requests to reveal information unless the info is under one of nine exceptions. FOIA only impacts background checks and hiring in unique cases, such as being hired for a government role. 

The Privacy Act of 1974

The privacy act exists to protect consumer/candidate information from being shared. For example, a background check reveals a person’s age, address, etc. This information cannot be sold or distributed to an unaffiliated third party if your company is legally liable. The privacy act covers the storing and eventual deleting of private information.

Other Compliance Considerations

Age Discrimination in Employment Act: This act prohibits employers from considering age as a factor in their hiring decisions. This law was first enacted in 1967 and covers every part of employment, from hiring to layoffs to promotions, etc.

Immigration and Nationality Act: Also known as INA, this act goes back to 1952 and prevents employers from discriminating against national origin. This particular law has undergone numerous changes since its inception. Employers looking to stay within background check compliance should ensure they know the most recent updates to INA.

California Consumer Privacy Act: Better known as CCPA, this act has only been around since 2018. Under it, residents can request businesses delete the resident’s personal information and ask them how they use their personal info and what info they have. It creates an entirely transparent relationship between consumer and business marketing. It applies to hiring managers as background checks have a candidate’s info.

How to Ensure Background Check Compliance

The easiest way to ensure background check compliance is to use KarmaCheck’s API. A background API streamlines the process by automatically pulling relevant data on candidates into your system. To be clear, KarmaCheck’s API has compliance features built into the system. That’s less you have to worry about and less time you’ll spend submitting background check requests. All you need to do is click the contact us button today. 


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