Can You Legally Share Background Check Information with Another Company?
When conducting pre-employment background checks, it’s not unusual for companies to outsource this task to a third-party vendor. But can the information gathered by these vendors be legally shared with another company?
In short, it depends on the circumstances.
The Fair Credit Reporting Act (FCRA)
The Fair Credit Reporting Act (FCRA) is a federal law that governs how consumer reporting agencies (CRAs) collect, use, and distribute consumer information. When a third-party vendor conducts a background check, they are considered a CRA under the FCRA.
The FCRA has strict guidelines for how CRAs can distribute consumer information to third parties. Generally, CRAs can only disclose consumer information for certain permissible purposes, such as employment screening or credit decisions.
If a company wants to share background check information with a third party, they must obtain written consent from the consumer first. This written consent must specify the purpose of the disclosure and the identity of the recipient.
Exceptions to the FCRA
There are some exceptions to the FCRA’s consent requirements. For example, if the disclosure is required by government agencies or if it is necessary to comply with a court order.
Additionally, according to the FCRA, a CRA may disclose information to another CRA for the purpose of fulfilling an employer’s request for a background check. This means that if a company wants to share a background check report with another company, they can do so as long as both companies are CRAs and the report is being shared for the purpose of employment screening.
The Importance of Compliant Disclosure
It’s important for companies to understand the legal requirements of sharing background check information with another company. Failure to comply with the FCRA can lead to costly lawsuits and damage to a company’s reputation.
To ensure compliant disclosure, companies should obtain written consent from the consumer before sharing any background check information with another company. The written consent should clearly state the purpose of the disclosure and the identity of the recipient.
While companies can legally share background check information with another company, it must be done in compliance with the FCRA. CRAs must obtain written consent from the consumer and the disclosure must be for a permissible purpose.
Companies should take the necessary steps to ensure compliant disclosure to avoid legal repercussions and damage to their reputation.