October 23rd, 2013 | Sterling
Ask Angela: Who Should Have Access to Background Check Results?
You asked for it–you got it! “Ask Angela” is your chance to ask those nagging compliance questions that keep you up at night and have you scratching your head. Thanks for all of your great questions—keep ‘em coming! This month the question relates to who is able to obtain a copy of an employment background check.
We have EmployeeScreenIQ do all of our background checks for us. We are a temporary employment agency where we place engineers/technicians with our clients. The employees are W2 employees of our company.
My question is: One of our clients has requested a copy of the background results for our employees that we have working at their facility. We wanted to make sure it is legal for us to pass on [the background report] to our client without getting ourselves into trouble.
I love this question. It comes up all the time with clients, human resources departments in staffing firms, temporary placement agencies, and Professional Employer Organizations (PEOs). It can also apply when a company hires contractors to work on the premises. Here is how it usually goes: The staffing company has a contract with a third party background screening company to conduct background checks for them. Those applicants become employees of the staffing company (the “Employer”), but they are actually temporary employees working on site for the Employer’s client (who we’ll call “Client”). In Cynthia’s scenario, the Client asks to see a copy of the background check.
Why Would Anyone Want to Do That?
There are many reasons that the Client and Employer would both want to see the background check results. A few obvious ones:
- Liability. Believe it or not, the Client faces just as much liability as the Employer for the worker’s actions—just as much as if they were one of their own employees. Just because the worker is not on Client’s payroll doesn’t give him a pass if the worker commits a crime in the workplace, injures another worker or harms the public. Workplace safety and security depends on the quality of the product, and if there is a bad hire, then both parties are at risk.
- Accountability. The Client needs to make sure that the Employer and the background screening company are doing what they promised—screening applicants. Usually the Client is paying for the background check or it is built into the cost of the service. One way to verify the quality of the screening is to have access to reports.
- Reputation. The Employer/staffing firm’s business reputation may have been built on their solid screening practice—Client is relying on the Employer to bring them only well-qualified and vetted applicants who have been thoroughly screened. Any negative publicity that comes out of a bad hire will harm the staffing firm as well as the Client–who will blame the staffing firm, who will then blame the screening provider. Understanding the process, knowing that you are working with trusted professionals, and building in checks and balances can only help.
Is it Legal?
So the question remains– is it legal for both parties to see the reports? Maybe. The Fair Credit Reporting Act (FCRA) regulates background screening reports, and has many built in protections to guard the privacy and confidentiality of employment background checks.
- Permissible Purpose: In order to have a legal right to request an employment background check, you have to have a “permissible purpose” under the FCRA to obtain a report. In short, employment is a permissible purpose. Employment is defined as evaluating an applicant or employee for employment, reassignment, or retention.
In Cynthia’s scenario, it is very likely that both the Employer and the Client have a permissible purpose to obtain a copy of the report under the FCRA.
- Consent is another hurdle in the process. Under the authorization and disclosure provisions of the FCRA, the applicant or employee must authorize, in writing, the release of any information in a background check or consumer report. In addition, disclosure is needed to verify that the Employer is requesting the report, as well as information about the background screening company and any additional third party who may also have a legal right to view the report. So if the staffing company and the Client are going to jointly request the report, the authorization and disclosure form, or consent form, needs to clearly spell out who is requesting and ultimately, viewing the report.
If Cynthia’s company wants to provide the report to the Client, she needs to revise her authorization and disclosure forms (consent forms) in order to make sure roles and responsibilities, as well as consumer remedies are clearly spelled out. Her background screening provider can help her with that language.
- Contractual considerations: Your contract with your background screening company may prohibit sharing reports with other parties. If so, an addendum to that agreement may be necessary. In addition, you want to avoid any confusion as to who is the actual Employer. Consider including contractual language that clarifies who is the employer and that the joint use of reports does not create an employment relationship.
This is a great issue to discuss with your legal counsel. The right answer will depend on whether both parties (the Employer and the Client) both have permissible purpose, whether the proper steps have been taken to put the applicant on notice, and the final decision you make when weighing the options.
Have a question? Send a compliance question to Angela at firstname.lastname@example.org and you might see a response in our next issue of By The Way!
Disclaimer: EmployeeScreenIQ is not a law firm and the information provided in this article does not constitute legal advice.
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