One final comment regarding this matter. According to the FTC, ‘Applicants are often asked to give references. Whether verifying such references is covered by the FCRA [like criminal background checks, motor vehicle checks,etc. that are procured by a consumer reporting agency] depends on who does the verification. A reference verified by an employer is not covered by the Act; a reference verified by an employment or reference checking agency (or other consumer reporting agency) is covered.’ From a recruiter’s standpoint, I would focus on the exclusionary language and requirements set forth in Section 603(o)of the Act.

I trust this further information is helpful.

As I stated in my post on 01/17/07 there is an effective and legal way to do this, it starts with the resume. I am sure you know you must get the candidate to sign a refinance and background check release, every one of them; part of you agreeing to work with a candidate, they must sign a release. All resumes must have a disclosure on the bottom of each page.

Reference checks are part of my daily plan, usually after lunch, they are the easies part of the day.

I wish you a life to be proud of, Barb Jones, President and CEO— APB Global Services, LLC
barbara@apbglobal.com or apbglobal@yahoo.com 214-228-9717 PST

I’m not an attorney, but based upon what I have read so far, I believe it is a fair suggestion that all recruiters do as Barbara suggests, get WRITTEN permission before doing ANY checking on a candidate, and that should include referencing checks, as sometims a reference check may ultiimately turn into a background check (investigative consumer report) as the conversation may turn to more personal characteristics.

Make sure there is a disclosure release on the document – meaning if the candidate asks that you will release the information to the candidate, and SAVE that information for a period of at least 1 Year.. re the New FCRA Ammendment.

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=108_cong_public_laws&docid=f:publ159.108

I’m not an attorney, but based upon what I have read so far, I believe it is a fair suggestion that all recruiters do as Barbara suggests, get WRITTEN permission before doing ANY checking on a candidate, and that should include referencing checks, as sometims a reference check may ultiimately turn into a background check (investigative consumer report) as the conversation may turn to more personal characteristics.

Make sure there is a disclosure release on the document – meaning if the candidate asks that you will release the information to the candidate, and SAVE that information for a period of at least 1 Year.. re the New FCRA Ammendment.

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=108_cong_public_laws&docid=f:publ159.108

Investigative Consumer Reports are anything that discloses character, general reputation, personal characteristics, or mode of living’ of the consumer being considered for employment

Page 25 of the NAPS CPC study Guide clearly defines that http://www.recruitinglife.com/EduCert/downloads/cpc_study_guide.pdf

Q. Why was the Fair Credit Reporting Act enacted?
A. Complaints because of why credit was denied and not knowing why or because of
inaccurate reports of credit reporting agencies.

Q. When does the act apply to employment agencies?
A. When the agency checks the references of an applicant or candidate in order to determine
the eligibility of that person for referral to employers for employment.

Q. Why?
A. Consultants who engage in reference checking are engaged in the complication of an
investigative consumer report. Any written, oral, or other communication of any information by
the consumer reporting agency bearing on a consumer?s credit worthiness, credit standing,
credit capacity, character, general reputation, personal characteristics, or mode of living which is used in whole or in part as a factor in establishing eligibility for employment purposes.

Q. Does the placement firm have to gain the permission of the candidate in order to do a
reference check?
A. The candidate must consent orally or in writing to the nature and scope of the communication before a reference check is conducted, and if the consent is granted orally, the placement firm must provide written confirmation of that consent within three business days after consent is
given.

Q. What information about any reference check is the candidate entitled to have?
A. The placement firm must, within five business days after receiving any request from a
candidate, disclose in writing the nature and substance of all information in the candidate?s file. The sources of the information need not be disclosed.

Q. How has the act been changed by recent legislation?
A. From a placement perspective, the most important differences are the following:
Personnel consultants must now obtain the candidate?s permission to conduct reference checks
and communicate with prospective candidates regarding its results.
Previously, no disclosure should to be made to the candidate until three days after the reference
check was conducted. Now, the candidate?s consent must now be obtained before the
recruiting firms conducts a reference check, even though that consent may be confirmed in
writing as late as three business days following the date upon which the consent was obtained.
While candidates have always had the right to request the nature and substance of the
information contained in the reference check, previously that information has to be provided to
the candidate in the same manner in which it was requested. Now, the information must be
provided in written form and within five days after it is requested.

Q. Under what circumstances can certain information not be conveyed to third parties:
A. If the salary will not be over 75K the following information may not be disclosed:
Bankruptcy actions more than 10 years before the reference check. None of the following if
occurred more than seven years before the date of the reference check: 1) suits, 2) judgments,
3) paid tax liens, 4) accounts placed for collection, 5) arrest, indictment and conviction records and 6) Other adverse information over seven years prior to reference check.

Read the full 86 Pages of the document.. and what really got to me about this is how messed up it is in it’s own way.

A company can take a risk in Not using an outside agency, and have problems that may arise from poor background checking.. Also poor use of Manpower and such like.

Yet, if they use an agency for an internal investigation, they have to tell the individuals hey, we are investigating you.. sign off..

It is almost like a lose lose situation. It is almost better to hire your own internal investigator, but then, again, here still can come internal legal risks..

Catch 22

I trust this is helpful.

Anyways, based upon the ambiguity.. ‘Under Section 603(o) provides special procedures for reference checking; otherwise, checking references may constitute an investigative consumer report subject to additional FCRA requirements’

Then under Section 603(d)(1) of the FCRA defines a ‘consumer report’ to include information that 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 the purposes listed in Section 603 and Section 604. The purposes for which information may be obtained under Section 603 and Section 604 include credit, insurance, and employment-related purposes, and business transactions initiated by the consumer
An ‘investigative consumer report’ is defined as a consumer report or portion thereof in which information on a consumer’s character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer reported on or with others with whom he is acquainted or who may have knowledge concerning any such items of information

Now, when we go further on the letter mentions You cannot get consumer reports unless you’ve notified the employees that you may obtain reports and have their written permission. If the employees gave you written permission in the past, you need only make sure that the employees receive or have received a ‘separate-document’ notice that you may obtain reports during the course of their employment and you must notify the employees and get their written permission before you get their reports

Now I also read that this may be based upon information gathered and if it is Adverse information.. ‘explained that the staff of the Commission does not consider graduation dates, college degrees, or dates of employment to be items of ‘adverse information.’ dates of employment and educational data (such as dates of graduation and degrees) are neither ‘positive’ nor ‘negative.’ We believe that facially neutral information should not be considered ‘adverse’ information because a consumer may have misrepresented the information’

It continues with Section 604(b) of the FCRA applies to employers who procure consumer reports for employment purposes. Section 604(b)(2)(A) requires them to provide a clear and conspicuous disclosure in writing to the consumer before a consumer report is obtained; under the terms of this section, this disclosure is required to be ‘in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes.’ Section 604(b)(2)(B) re-quires that the employer obtain the consumer’s written authorization before procuring the report. While Section 604(b)(2)(A) states that the required disclosure that a consumer report may be obtained is to be made in a document that consists solely of the disclosure, we believe that the drafters did not intend to say that a disclosure statement should exclude the written authorization for procurement of a report required by Section 604(b)(2)(B). Rather, we believe that it was the intent of the drafters to assure that the required disclosure appear conspicuously in a document unencumbered by any other information.

So, my confusion, as it seems also the Confusion of the FTC.. does this not then mean that a reference can be considered an investigative consumer report that has adverse information, and thus the employer can be held accountable.. not only third parties?
And of course the Employer MUST have Permission prior to checking those references, unless they are based upon if the information gathered would have potential for adverse information?
And of course applicants are entitled to a pre-adverse action disclosure and an adverse action notice ? In other words be told that they aren?t going to be hired because of what was discovered?
Or am I misreading this information..

Just to clarify, the Fair Credit Reporting Act (‘FCRA’) does not cover reference checks when they are conducted by the prospective employer. Only when an employer retains a consumer reporting agency to conduct such checks do they fall within the purview of the FCRA.

I trust this information is helpful.

Reference checking is an art form, armed with laws; real laws that put you and your clients at risk for legation. You must know the law here, it can and will hurt you. You can get an outside firm to do this but they can miss the boat as well. There are 5 forms of Identification, a lot to help ID Thefts get rich; it is a 14 billion dollar market, caution, outside firms can get the wrong information as well. The question will always be asked who placed the person you or the outside firm?

Most companies don?t interview candidates well and are even worse at reference checking, some recruiters fall into that bracket as well. There is an effective and legal way to do this, it starts with the resume. I am sure you know you must get the candidate to sing a refinance and background check release, every one of them; part of agreeing to work with you a candidate a must sign a release. All resumes must have a disclosure on the bottom of each page.

With the American Association of Personal executives have stated; that 67% of all resumes on the market are falsified in one form or another, it starts with the resume. Reference checking takes time and a PI attitude to do it justice; it also justifies a full fee.

This is a subject I train clients with and teach to other recruiters. I would be happy to share information, not war stories.

I wish you a life to be proud of, Barbara Jones, President and CEO— APB Global Services, LLC
barbara@apbglobal.com or apbglobal@yahoo.com 214-228-9717 PST

On a $125k Controller position 7 years ago, the candidate gave me 24 (!) references. I got ahold of, and did a thorough interview with 21 of them. An offer $130k was made, that was not planned, on the bases of these, more than what the candidate wanted. But, alas, he took a lesser offer on a start-up that didn’t work out, and was 2 weeks later offering to take it at $100k. They declined. Oh well. Jon

Sometimes Identity theft can create problems as well ? if a person has issues with ID theft, and are unaware, then in a job search, when a company does a background check and see this bad credit, and the job requires that they must handle money, well it can be difficult to prove, hey, that wasn?t me who harmed my credit.

When companies don?t rely on companies to do background searches, the companies who don?t adhere to legal and compliant standards, the opposite can happen as well. A person with a federal criminal background may also now come up as clean. Now you may have a facility Manger who has been a Chester Molester working at schools, as a teacher, or as a service technician going into homes..

The biggest problem that arises may not gaining accurate information regarding background. Candidates have been known to lie about education, ability, tenure, and where they worked. Can you imagine having a Professional Engineer signing off on Documents and finding out later that they were not really a professional engineer? Their information was illegitimate? Or that the person handling finances for your clients had been arrested for ID Theft, fraud or embezzlement?

The University of Maryland did a study recently on the Hundreds of Companies who are advertising their background checking.. They enlisted a background check company to conduct search on the 120 parolees and probationers that were part of the study, to see whether any additional arrests would appear on their records.
Sixty-four of the 120 convicted criminals in the study came back with spotless criminal histories. The company they used was considered one of the better in the industry, not one of the national 9.95 searches.. so it is really important to check out your background checker and make sure that they really are applying to legal standards as well. Even the best companies’ reports contain errors. Criminals look innocent, or the innocent look criminal.
The most important thing that We must remember is that the FCRA ? Fair Credit Reporting Act clears loudly that before the company makes an adverse decision in deciding NOT to hire the candidate due to information found on a background check, that the candidate must be informed and allowed to dispute the information.
And make sure that the information you are Checking REALLY is going to be geared to the Job Description, or the duties performed. If a person has filed for bankruptcy, or has a criminal record, but it doesn?t pertain to the duties at hand, then ask yourself, is it really important? How old was the record, have they since proven to be model citizens? Is this person?s past going to really affect what they do today. Set standards, and have a solid job description and more importantly remember what you do with one person, you should be doing with all.

Matt

Doctor Sullivan that was an excellent article, and right on the Nose, Congrats.
Too many companies don’t put enough, and sometimes way too much emphasis on Background checking.

Background checking can reduce and even eliminate legal, financial and risk associated with poor hires, and the cost in having to fire those individuals.

Sometimes though, as was mentioned, employers may put too much emphasis on those same checks, by not focusing on Criteria that is important to the position, but will instead become focused on emotional, personal and subjective criteria knocking excellent candidates out of the loop.

One of the problems from implementing these tactics is that it opens the door for unfair treatment; Employers not treating candidates fairly and equally, by performing the same processes across the board will open the doors for potential liability. So it is extremely important to implement good judgment when performing background checks, and having Consistent Standards within any company.

Great Article Dr. Sullivan. Hope to see more like this in the future.

Karen M.