Small company background checks involve all the same things big company background checks do; the small scale has nothing to do with the quality or comprehensiveness of the check. But many small business owners are new to background screens. If this is you, here are eight common terms you need to know:
- CRA (Consumer Reporting Agency). CRAs are organizations that collect, evaluate, and report consumer information to third parties who will use this information to determine eligibility for employment, credit, loans, and more.
- FCRA (Fair Credit Reporting Act). The FCRA is federal legislation passed to promote privacy, fairness, and accuracy-related to data collected and disseminated by CRAs.
- Summary of Rights. The Summary of Rights informs consumers of the rights given to them by the FCRA. After a background check is completed, employers must provide candidates with a copy of the Summary of Rights.
- Permissible purpose. CRAs are allowed to share consumer reports with organizations and individuals who have a permissible purpose for obtaining and using the information. Permissible purposes include obtaining credit, securing loans, purchasing insurance, and securing employment.
- Pass-through fees. In addition to the standard fees CRAs charge for completing background checks, some third-party fees may also apply. For example, if a state DMV has a charge for pulling a motor vehicle report, the CRA will pass that fee to the end user. Some CRAs will markup these fees, so be sure to read the fine print.
- Adjudication. For HR professionals, adjudication refers to the process of measuring a background check report against the company’s written screening policy to determine if the candidate meets the defined hiring criteria. Many background screening agencies offer automatic adjudication services as part of their screening packages. These services allow companies to set custom filters based on industry and position requirements. A manual review of results is often still required before final hiring decisions are made.
- Pre-adverse and Adverse Actions. Adverse actions refer to negative hiring decisions made based on the results of a background check. Examples include rescinding a conditional job offer, denying a promotion, or terminating employment.
- Disclosures. Candidates must be notified that a background check is being requested. The language and timing of the required disclosures are very specific, and applicants must provide written notification that the disclosures were received.
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