Documenting Business Policies and Procedures

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Compliance Don't Do
Business Without It May 23, 2007 200 PM
ET Mary Poquette Chief Compliance Officer,
Verifications, Inc. NAPBS Board Member
Education Committee Member
NAPBS Education Series Background Screening 101
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• compliance
• Function noun
• 1a the act or process of complying to a
  desire, demand, proposal, or regimen or to
  coercion b conformity in fulfilling official
  requirements
• 2 a disposition to yield to others
• 3 the ability of an object to yield elastically
  when a force is applied
• Source Merriam-Webster Online Dictionary
• http//www.m-w.com/dictionary/compliance

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Topics

• Sources of Requirements
• Key Terminology
• Requirements
• Provider of Information
• Client User of Information
• Consumer Rights
• Global View

Why?
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Why?

• Its the Law!
• Increase Defensibility
• Avoid Penalties
• Protect Company Reputation
• Smart Business

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Its About People
Employer
Applicant
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Sources of Requirements

• US
• Federal Fair Credit Reporting Act (FCRA)
• (15 U.S.C. 1681 et seq.)
• States
• FCRA Analogues

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Secondary Sources

• US Secondary
• EEOC
• ADA
• HIPAA
• US Regulated Industries
• Financial Services
• Transportation
• Insurance

• States
• Data Security
• SSN Protection
• Employment Law
• Criminal Code
• State Regulated Industries
• Healthcare
• Education
• Security

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Sources of Requirements

• State and Federal Law
• FCRA
• FCRA State Analogues

• International Access and Privacy Laws
• Regional (i.e. European Union)
• Country Specific
• International Data Transfer Laws

• Information Sources
• Credit Bureaus
• State DMVs
• Proprietary Sources
• Work Number for Everyone
• National Student Clearinghouse
• Academic Institutions
• Employers

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Topics

• Sources of Requirements
• Key Terminology
• Requirements
• Provider of Information
• Client User of Information
• Consumer Rights
• Global View

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Key Terminology

• Consumer
• Consumer Report
• Investigative Consumer Report
• Consumer Reporting Agency
• User of Consumer Reports
• Adverse Action

Variances by Regulatory Body
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Key Terminology

• Consumer
• The person who is the subject of the background
  report the person who is seeking employment,
  retention, or promotion by an employer.
• FCRA 603(c) The term consumer means an
  individual

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Key Terminology

• Consumer Report
• One of two official names for a report more
  commonly called a
  Background Report, Background Investigation,
  or Background Check.
  This report provides factual
  information about an individual which is used
  as part of an
  employment decision.
• FCRA 603 (d)(1) In general. The term consumer
  report means any written, oral, or other
  communication of any information by a consumer
  reporting agency bearing on a consumers credit
  worthiness, credit standing, credit capacity,
  character, general reputation, personal
  characteristics, or mode of living which 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 consumers eligibility for
• (B) employment purposes

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Key Terminology

• Investigative Consumer Report
• One of two official names for a report more
  commonly called a Background Report, Background
  Investigation, or Background Check. This report
  includes opinion and may also provide factual
  information about an individual which is used as
  part of an employment decision.

Example Was s/he employed by your company?
This calls for a factual response. How did s/he
perform on the job? This calls for an
opinion. FCRA 603 (e) The term investigative
consumer report means a consumer report or
portion thereof in which information on a
consumers 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 other with whom he is
acquainted or who may have knowledge concerning
any such items of information.
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Key Terminology

• Consumer Reporting Agency
• Another name for a background screening company.
  
• FCRA 603(f) The term consumer reporting
  agency means any person which, for monetary
  fees, or on a cooperative nonprofit basis,
  regularly engages in whole or in part in the
  practice of assembling or evaluating consumer
  credit information or other information on
  consumers for the purpose of furnishing consumer
  reports to third parties, and which uses any
  means or facility of interstate commerce for the
  purpose of preparing or furnishing consumer
  reports.

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Key Terminology

• User of Consumer Reports
• An employer who, as part of an employment
  decision, considers the information in a
  background report
• Employment Purposes
• FCRA 603(h) The term employment purposes
  when used in connection with a consumer report
  means a report used for the purpose of evaluating
  a consumer for employment, promotion,
  reassignment or retention as an employee.

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Key Terminology

• Adverse Action
• A negative employment decision such as not
  hiring, not retaining, or not promoting an
  individual.
• FCRA 603(k)(1) Actions included. The term
  adverse action
• (B)(ii) a denial of employment or any other
  decision for employment purposes that adversely
  affects any current or prospective employee

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Results
Sample of Consumer Report / Investigative
Consumer Report
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Its About People
Employer
Applicant
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Topics

• Sources of Requirements
• Definitions
• Requirements
• Provider of Information
• Client
• Consumer Rights
• Global View

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CRA Requirements

• FCRA
• Authenticate Clients
• A process designed to ensure the prospective
  user of consumer reports (the employer) is a
  legitimate business entity.
• Obtain Signed User Certification
• A document provided by the background screening
  company which must be signed by the employer
  before the screening company will provide
  background reports to the employer. The employer
  must certify to
• - Permissible Purpose
• Legal Use
• Data Security/Confidentiality

• Disclosure
• Authorization
• Adverse Action

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Sample User Certification
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FCRA Certification Specifics
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CRA Requirements

• State FCRA Analogues
• Reflects Federal Requirements
• Adds Requirements
• California Disclosure
• California Report Notice Page
• MN, CA, OK Checkbox
• ME and NY Disclosure
• State Access and Reporting
• State DMV Access
• Statewide Criminal Record Access
• Criminal Record Reporting Limitations

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Sample of State Disclosure and Related
Requirements
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Topics

• Sources of Requirements
• Definitions
• Requirements
• Consumer Reporting Agency
• User of Consumer Reports
• Consumer Rights
• Global View

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Client Requirements

• FCRA
• Disclosure
• Refers to the document and the process of
  informing an applicant/ employee that s/he will
  be the subject of a background report.
• Clear, Conspicuous, Separate Document
• Authorization
• The document for and process of obtaining
  written permission from the applicant/employee
  for the background investigation to be conducted.
  
• May be Combined with Disclosure
• Some exceptions exist.

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Sample Disclosure and Authorization
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Client Requirements

• FCRA
• Adverse Action
• A negative employment action such as not hiring
  an applicant not promoting or not retaining an
  employee
• Preliminary Adverse Action
• Referring to documents and the process which
  must be followed when a negative employment
  decision is being considered,
• Action The applicant/employee receives notice,
  a copy of his/her background report, and A
  Summary of Your Rights under the Fair Credit
  Reporting Act. This is also referred to as
  Pre-Adverse Action and First Notice.
• Final Adverse Action
• Referring to the document and the process when a
  negative employment decision is made.
• Action The applicant/employee receives notice
  of the decision.

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(No Transcript)
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Client Requirements

• State
• Reflects Federal Requirements
• Adds Requirements
• California Disclosure Language and Frequency
• California Report Notice Page
• MN, CA, OK Checkbox
• ME and NY Disclosure

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Global View

• Privacy Principles
• Collection Limitation
• Purpose Specification
• Use Limitation
• Security Safeguards
• Openness
• Individual Participation
• Accountability
• Source Organization for Economic Cooperation
  and Development (OECD) September 23, 1980
  http//www.oecd.org/document/18/0,2340,en_2649_342
  55_1815186_1_1_1_1,00.html

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Summary

• CRA must authenticate user of consumer reports
• CRA must obtain signed user certification from
  user
• User must disclose to and obtain authorization
  from consumer
• CRA must ensure up-to-date, accurate information
  is reported
• If adverse action is considered, user must
  provide notice, copy of report, and summary of
  rights
• Consumer must have opportunity to dispute prior
  to final adverse decision by user of consumer
  reports
• If adverse action is taken, consumer must receive
  final adverse action notice
• All applicable laws and regulations must be
  followed by CRA and user of consumer
  reports/investigative consumer reports

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Questions