Direction on Background Checking Compliance

A new lawsuit filed on February 3 in the U.S. District Court, Western District of North Carolina serves as a great reminder that employers must stay compliant with the Federal background checking law, the Fair Credit Reporting Act (FCRA).

In the case of Hale vs Lowe’s, the plaintiffs allege that Lowe’s failed to follow the procedures dictated by the FCRA and provide the applicant with a copy of the report and subsequently required paperwork before they made a negative hiring decision.

While the 2021 numbers are still being tabulated, the preliminary numbers show that despite a lot fewer background checks being performed in a year of COVID, last year’s number of FCRA-related lawsuits has yet again increased as much as 3.5%.

This case serves as a warning that employers should still strive to remain compliant with Federal laws. The FCRA has certainly provided the basis for some very expensive court-ordered settlements.

To avoid the pitfalls of the FCRA, you need to remember these steps:

  1. Have a permissible purpose (employment)
  2. Obtain written consent from the applicant
  3. Run the check through your third party Consumer Reporting Agency, like Catapult
  4. Look at the results and decide if the applicant fits the needs of your company:
    • If the record is clean, keep the authorization form in a secure place.
    • If the report has information that is causing concern before you decide on hiring, you must share with the applicant the following:
      1. Mail a copy of the report, and
      2. A summary of the applicant’s rights under the FCRA, and
      3. A pre-adverse action letter, which includes the third party’s (background checking company’s) name and contact info

If your company is in North Carolina, you should also send a copy of the NC Security Freeze to the applicant. Other states may also have state-specific documents that are required. After a reasonable amount of time, which we’d recommend around 5 business days, you will need to mail the declination letter to your applicant. During this time, you should hold the position to give the applicant a chance to respond. After this “reasonable time,” you may hire the appropriate applicant and fill the position. Make sure you store the rejected applicant’s signed written consent in a secure place!

Also, don’t forget that the EEOC wants you to follow the Green Factors and Individualized Assessment during this process too. Catapult experts are happy to help ensure you’re compliant with the FCRA, and we can also help you with your background checking needs.

For more information please contact Kevin W. von der Lippe by e-mail at

*Capital Associated Industries Services Corporation is a wholly-owned licensed investigative agency of Catapult Employers Association, Inc., specializing in corporate pre-employment background screening. Our corporate agency license is BPN 001473P11 M.