Don’t Run Afoul of the Fair Credit Reporting Act!

Author’s Note: We originally published this article in 2014, and it still holds true today. In fact, with “Ban the Box” and “Fair Chance” laws, which are designed to level the playing field for people with criminal histories, and with new restrictions on the handling of personal information, navigating the maze of background check rules has become even more difficult. Add to this new “salary ban” lawswhich prohibit employers from asking about prior salaries—and compliant hiring has become complicated, at best. This article, which details a true story, served as a cautionary tale then, as it does, now.

We recently learned of a situation where a business hired a background screening firm that, in the terms of the paperwork it had applicants sign, stated a requirement that was illegal. Specifically, the vendor stated that by signing the background check authorization form, the applicant was agreeing to hold the vendor and its client harmless from any activity relating to the background check or the information obtained through the process.

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The Fair Credit Reporting Act (FCRA) prohibits an employment screening firm or its clients from forcing an applicant or employee to sign away his or her right to secure treatment of their private, sensitive information. If the vendor or client were to use (or improperly handle) this information in a way that harmed the prospective employee, he or she absolutely would have the right to take legal action. In this case, the individual did just that.

Hold harmless statements are commonplace and many companies add them to contracts or agreements without thinking twice about it. Where laws like the FCRA are involved, such a practice is dangerous and actionable. One of our jobs at MarathonHR is to help you ensure you never make such a mistake. In addition to having your own documents reviewed by an attorney, be mindful of the vendors you work with who might make representations on your behalf, especially where FCRA and other complex laws are concerned.