Background Screening Policy
BACKGROUND SCREENING POLICY
OVERVIEW
When making personnel decisions, including hiring, retention, promotion, and reassignment, employers sometimes want to consider the backgrounds of applicants and employees. The Fair Credit Reporting Act (FCRA) contains specific requirements for persons, such as financial institutions, that obtain consumer reports of its employees or prospective employees prior to, and/or during, the term of employment. The stated requirements are:
In general. A person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless –
a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and
the consumer has authorized in writing (which authorization may be made on the document referred to in clause (a)) the procurement of the report by that person.
In general. In using a consumer report for employment purposes, before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates –
a copy of the report; and
a description in writing of the rights of the consumer under this title, as prescribed by the Bureau under section 609(c)(3).
If a person who has procured a consumer report for employment purposes takes adverse action based in whole or in part on the report, then the person must provide to the consumer to whom the report relates within 3 business days of taking such action, an oral, written, or electronic notification –
that adverse action has been taken based in whole or in part on a consumer report received from a consumer reporting agency;
the name, address and telephone number of the consumer reporting agency that furnished the consumer report (including a toll-free telephone number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis);
that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide to the consumer the specific reasons why the adverse action was taken; and
that the consumer may, upon providing proper identification, request a free copy of a report and may dispute with the consumer reporting agency the accuracy or completeness of any information in a report.
As defined in the FCRA –
The term “consumer” means an individual.
The term “consumer report” means any written, oral or other communication of any information by a Consumer Reporting Agency (CRA) bearing on a consumers: 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 or insurance to be used primarily for personal, family, or household purposes; employment purposes, or if the CRA has reason to believe that the entity intends to use the information in connection with the collection of a debt.
The term “consumer reporting agency” means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.
The term “employment purposes” when used in connection with a consumer report means a report used for the purpose of evaluating a consumer for employment, promotion, reassignment, or retention as an employee.
The term “adverse action” means an action taken or determination that is adverse to the interests of the consumer, including a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee.
The term “person” means any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity.
PURPOSE
This Policy has been created to formally establish the background criteria that Kredit will use to make employment decisions, as well as ensure that Kredit remains in compliance with the FCRA.
POLICY
It is the policy of Kredit Financial Inc. (Kredit) to conduct a criminal background check on all candidates for employment that complies with the requirements set forth in the FCRA for users of consumer reports.
SCOPE
This Policy pertains to all instances where Kredit obtains a consumer report for employment purposes.
ROLES AND RESPONSIBILITIES
Kredit’s Chief Executive Officer (CEO) is responsible for ensuring that a background check is performed on all candidates in accordance with the procedures stated in this Policy.
Kredit’s Chief Compliance Officer (CCO) is responsible for reviewing this Policy on an annual basis, at minimum, to ensure it reflects both the letter and spirit of current law.
PROCEDURE
Kredit requires that all candidates for employment undergo a background check to validate their identity, prior employment, external references, education, personal addresses, assertion of criminality and other activities. This requirement is disclosed in the offer letter to the potential employees.
Kredit utilizes GoodHire to conduct various searches, including, but not limited to:
SSN Trace and Identify Verification
Nationwide Criminal Databases Search
Sex Offender Check
Domestic Watch List and Global Watch List search (OFAC)
County Criminal Court Search
Prior to performing a background check on a candidate for employment, GoodHire provides the individual with an FCRA Disclosure Form and Summary of Rights under the FCRA and State Law Disclosures. The Disclosure Form explains that Kredit may request a consumer report, as defined by the FCRA, from a consumer reporting agency in connection with the candidate’s employment application.
GoodHire then provides the individual with an FCRA Authorization and Release Form that requests their authorization to obtain a consumer report and provides the candidate with the option to receive a copy of the report electronically. After receiving the signed Authorization and Release Form, GoodHire performs the background check.
If the background check yields a result that would cause Kredit to not hire the applicant (see Adverse Action Criteria below), the individual is sent a Pre-Adverse Action Notice, a copy of the consumer report (background check) that was obtained, and Summary of Rights Under the FCRA. If the individual does not notify Kredit of any errors in the report within five (5) days of receipt of the results, the individual is sent an Adverse Action Notice that explains they are not eligible for hire.
In the event a candidate notifies Kredit of an error in the report within five (5) days of receipt of the results, the individual must contact GoodHire to dispute the error. GoodHire will then investigate the dispute free of charge, make any necessary changes to the consumer report within 30 days, and notify Kredit of the dispute.
ADVERSE ACTION CRITERIA
Kredit will not hire a candidate for employment if the background check reflects a conviction, within the past seven (7) years of any felony or any misdemeanor for a financial crime, a crime of dishonesty, or a breach of trust.
As defined by Kredit –
The term “conviction” shall mean any outcome of a criminal proceeding that results in deprivation of liberty or property, including but not limited to a fine or jail/prison sentence (suspended or actually served). Pleas of guilty, “no contest,” or “nolo contendere,” as well as an actual conviction, are all considered to be a conviction for purposes of this policy.
The term “financial crime” shall mean any crime against property that involves the unlawful conversion of property or identity belonging to another to one’s own personal use and benefit. Financial crimes include, but are not limited to; fraud, theft, money laundering, embezzlement, extortion, and bribery.
The term “job-related felony” includes financial crimes, as well as violent crimes.
Kredit reserves the right to interview candidates whose background check reflects a felony or misdemeanor for a financial crime, a crime of dishonesty, or a breach of trust, for which they have not been convicted, including pre- or post-trial diversion programs, arrest records or bench warrants, to determine eligibility for hire.
If a client’s hiring criteria is more restrictive than that of Kredit, the client’s hiring criteria shall prevail.
COMMUNICATION
This Policy shall be communicated to all affected employees via email and maintained in the Policies folder in Google Drive for reference purposes.
VIOLATIONS
Failure to follow the above stated procedures may result in a violation of the Fair Credit Reporting Act and Kredit’s hiring practices, and as such, may result in disciplinary action up to and including termination of employment or contract.
CHANGE SUMMARY
Purpose: Internal Policy
Category: Human Resources
Policy Name: Background Screening Policy
| Event | Event Date | Event By | Date Reviewed | Reviewed By | Version |
|---|---|---|---|---|---|
Creation and Implementation | 01/10/2022 | Dave Hanrahan, CEO | 1.0 | ||
Revision – added FCRA req.; adverse action criteria, updated format | 05/02/2022 | Colene McNinch, CCO | 05/03/2022 | Dave Hanrahan, CEO | 1.1 |
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