Regulatory Compliance for Our Clients

There are four areas of compliance pertaining to our customers. 

  1. Fair Credit Reporting Act (FCRA): enforced by the Federal Trade Commission (learn more)

  2. Ban the Box: enforced by local, state or federal jurisdictions (learn more)

  3. NYC Local Law 37 of 2015: enforced by New York City Council (learn more)

See below for more information on each of these four topics


1. Fair Credit Reporting Act (FCRA)

To comply with FCRA regulations, employers need to follow these steps when including an investigate consumer report as part of a background check.

Before the background check is conducted

  1. The employer must obtain a signed authorization form from the applicant authorizing the collection of an investigative consumer report by Global Backgrounds.  Download Our Authorization Form
  2. The authorization form must "stand alone" and cannot be combined with any other releases, application information, or other.
  3. The employer must retain a signed copy of the authorization form and copy of a photo ID.  

After the background check is conducted

  1. Global will deliver the backgrounds check results to the employer.  The applicant is entitled to receive a copy of the consumer report from the employer.
  2. Upon employer review, if the results do not adversely impact the employer's hiring decision, the process is complete.  

If after review, the employer would like to take adverse action based on the results

  1. If the results of the background check prompt the employer to take an adverse actions (e.g. denial of employment, termination of employment, etc), additional steps are needed to comply with the FCRA.
  2. The employer must notify the applicant, in writing, of the intent to take an adverse action.  Sample of a Pre-Adverse Action Letter
  3. A copy of the background check and a summary of the applicant's rights under the FCRA must be provided (Summary of Rights from the FTC) to the applicant by the employer.
  4. Allow sufficient time for the applicant to review the background check and report any issues to the employer.  
  5. If there are items in dispute, then Global Backgrounds will re-investigate those items and provide an updated report.
  6. Upon final review, if  the decision is adverse, the employer must send a final notice of adverse action to the applicant.  Sample of an Adverse Action Letter

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2. Ban the Box

What is Ban the Box?

Although ban the box laws vary in each jurisdiction, generally speaking, the movement requires employers to remove the box asking applicants if they have been convicted of a crime from the initial application for employment.  The intent of the law is to give each applicant a fair chance at gaining employment based on their work capabilities and related qualifications.

The variation across jurisdictions comes in as to when the employer can ask if the applicant has a criminal history.  For example, in some jurisdictions an employer can ask after the initial interview.  In others, employers must wait until an offer of employment is extended.  Each jurisdiction is different, be sure to check your local laws.

How does it Impact Pre-Employment Screening?

As the ban the box movement sweeps across the United States, it's important for employers to understand what it may mean for their pre-employment screening processes.  As of today, 18 states and over 100 cities and counties have enacted a version of ban the box legislation*.  New York City is the latest big name city to implement this policy for both public and private employers.  Compliance with ban the box legislation is important to avoid unnecessary and expensive litigation.  

A best practice for HR departments is to conduct a thorough and lawful background screening before any new employee is onboarded to the organization, as permitted by law.  As long as your company's hiring policies include at a minimum (laws permitting), a comprehensive background check after an offer of employment is extended but before the employee is onboarded, then the process for vetting qualified candidates for any previous criminal activity likely remains unchanged if ban the box legislation is enacted in your business jurisdiction.  

What employers should do

Organizations would be wise to consult with legal counsel to review both their applications and background check procedures in the locations that they are currently and planning to do business in, to ensure "ban the box" compliance is being satisfied.  Additionally, in order to achieve a comprehensive profile on any applicant during the background screening process, it is important to check for criminal records at the local, state and federal level.

A good 3rd party breakdown by jurisdiction is available at this site (http://www.nelp.org/content/uploads/Ban-the-Box-Fair-Chance-State-and-Local-Guide.pdf)

*http://www.nelp.org/campaign/ensuring-fair-chance-to-work/

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3. NYC Local Law 37 of 2015

As you may already be aware, New York Local Law 37 of 2015 (NYC 37), passed on May 6th, 2015, is effective as of September 3, 2015.  This law prohibits employers from using an applicant’s consumer credit profile during employment related decisions such as hiring or promotion.  This law is applicable to all employers, both public and private, with exceptions as noted below.  As a result of NYC 37, changes are required to our Disclosure and Authorization form for employers domiciled in New York City. 

Changes to our Disclosure and Authorization Form, and submission process:

1. A specific authorization form needs to be used depending upon the candidates exemption status from NYC 37.

a. One form is for employees that are exempt from NYC 37

b. One form is for employees that are NOT EXEMPT from NYC 37

2. In addition to our updated disclosure form, we are requiring this checklist, which should be completed by a Human Resources Representative and not the applicant, accompany each request for a background check.  This form is intended to help guide the HR representative as to which authorization form to provide the applicant. 

Information about NYC 37

EMPLOYER EXEMPTIONS:

An employer, or agent thereof, that is required by state or federal law or regulations or by a self-regulatory organization as defined in section 3(a)(26) of the securities exchange act of 1934, as amended to use an individual's consumer credit history for employment purposes;

EMPLOYEE EXEMPTIONS:

Persons applying for positions as or employed:

(A) as police officers or peace officers, as those terms are defined in subdivisions thirty-three and thirty-four of section 1.20 of the criminal procedure law, respectively, or in a position with a law enforcement or investigative function at the department of investigation;

(B) in a position that is subject to background investigation by the department of investigation, provided, however, that the appointing agency may not use consumer credit history information for employment purposes unless the position is an appointed position in which a high degree of public trust, as defined by the commission in rules, has been reposed.

(C) in a position in which an employee is required to be bonded under City, state or federal law;

(D) in a position in which an employee is required to possess security clearance under federal law or the law of any state;

(E) in a non-clerical position having regular access to trade secrets, intelligence information or national security information;

(F) in a position: (i) having signatory authority over third party funds or assets valued at $10,000 or more; or (ii) that involves a fiduciary responsibility to the employer with the authority to enter financial agreements valued at $10,000 or more on behalf of the employer.

(G) in a position with regular duties that allow the employee to modify digital security systems established to prevent the unauthorized use of the employer's or client's networks or databases.

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Questions? Please contact us at 877.70.GLOBAL (4-5622)