Policy required document Workplace
Background Check and Fair Chance Hiring Policy
A background check policy sets when the employer runs reports on applicants and employees, what it checks, how it gets consent, how it uses what it finds, and how it tells someone before deciding against them. The federal Fair Credit Reporting Act is unusually procedural, and the procedure is where the lawsuits are.
Before obtaining a consumer report for employment purposes the employer must give a clear and conspicuous written disclosure in a document that consists solely of the disclosure, and get written authorization (15 U.S.C. 1681b(b)(2)(A)).
Before taking adverse action based on the report, it must give the person a copy of the report and a written summary of their rights (1681b(b)(3)(A)). A disclosure buried in the application form, or a liability waiver added to it, violates the standalone requirement, and because every applicant received the same form, the claims come as class actions.
The federal courts recorded 9,726 new consumer credit cases in the year to September 30, 2025, up from 8,731, a category that includes FCRA suits (Table C-2).
On top of the federal procedure sit the fair chance laws. California's Fair Chance Act forbids an employer with five or more employees from asking about or considering conviction history before a conditional offer, requires an individualized assessment of whether a conviction has a direct and adverse relationship to the specific job, and requires written notice with at least five business days to respond before a final decision (Government Code 12952).
More than a dozen states and many cities have versions. The policy is where the federal sequence and the state sequence are laid out so that a hiring manager does not run them in the wrong order.
Obligation ledger
Who requires it, and what each one says.
| Source | Applies when | What it requires | Status |
|---|---|---|---|
| Fair Credit Reporting Act, employment disclosure and authorization 15 U.S.C. 1681b(b)(2)(A) | Any employer obtaining a consumer report for employment purposes from a consumer reporting agency | A clear and conspicuous disclosure, in writing, in a document that consists solely of the disclosure, before the report is procured, and the consumer's written authorization. Legally required. | Mandatory |
| Fair Credit Reporting Act, adverse action 15 U.S.C. 1681b(b)(3)(A) | Before taking adverse action based in whole or in part on a consumer report | Provide the person a copy of the report and a written description of their rights under the Act before the decision, then an adverse action notice after it (1681m). Legally required. | Mandatory |
| California Fair Chance Act Cal. Gov. Code 12952 | California employers with five or more employees | No inquiry into or consideration of conviction history before a conditional offer; after the offer, an individualized assessment of whether the conviction has a direct and adverse relationship with the specific duties of the job; written notice of a preliminary decision with at least five business days to respond, and five more if the applicant disputes accuracy, before a final decision. Legally required. | Mandatory |
Required sections
- Which positions are screened, for what, and when in the process, with the conditional-offer sequence where fair chance law applies
- The standalone FCRA disclosure and separate authorization, with nothing else on the disclosure page
- Which consumer reporting agency is used and the certification the employer gives it
- The pre-adverse action step: copy of the report, summary of rights, and a waiting period before any decision
- The individualized assessment factors where required: nature and gravity of the offense, time passed, nature of the job
- The written notice of preliminary decision and the response window under state law
- The final adverse action notice under the FCRA (15 U.S.C. 1681m)
- Credit checks: the states and cities that restrict them, and the positions for which they are used
- Driving records, drug screens and reference checks, with their own consent rules
- Recordkeeping and disposal of reports, and who may see them
What the examiner asks for
What changed
Change log.
Frameworks
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Questions
What people ask.
Our application form has a paragraph authorizing a background check. Is that enough?
No, and it is the most common FCRA claim. The disclosure must be a document consisting solely of the disclosure. Putting it inside the application, or adding a release of liability, breaks the rule for every applicant who signed it.
Can we withdraw an offer as soon as the report comes back?
Not without the steps. Federal law requires a copy of the report and the summary of rights before the decision; California requires the individualized assessment and at least five business days for the applicant to respond. Skipping the wait is the claim.
Do we need this if we only Google candidates?
The FCRA applies to reports from a consumer reporting agency, so a manager's own search is outside it. The fair chance laws apply to what you consider and when, regardless of source. And what a manager finds on their own can create discrimination exposure the policy should address.
Why are these cases so expensive?
Because the defect is in the form, and everyone got the form. FCRA claims for willful violations carry statutory damages per person without proof of harm, which is why they are brought as class actions on behalf of every applicant screened.
Sources
15 U.S.C. 1681b, FCRA permissible purposes of consumer reports, employment conditions (Cornell LII)15 U.S.C. 1681m, FCRA requirements on users taking adverse actions (Cornell LII)Cal. Gov. Code 12952, Fair Chance Act (California Legislative Information)Table C-2, U.S. District Courts civil cases commenced by nature of suit, 12 months ending September 30, 2025 (Administrative Office of the U.S. Courts)