Chapter 2 Flashcards
The Fair Credit Reporting Act
Federal law regulating reference checking.
New Fair Credit Reporting Act
Recent amendments imposed more stringent requirements upon someone furnishing reports on consumers to third parties, for credit, insurance or employment purposes.
New act contains a section (i.e., Excluded Communications) of which all placement firms should seek to take advantage.
Whats the difference between the old and new fair credit reporting act
Employers must obtain candidate consent to conduct a reference check before that check is conducted.
Permission can be obtained orally, but must be confirmed in writing within three days.
Candidates have the right to know the nature and substance of the information contained in the reference check, and it must be given in writing within five business days of request.
Using Third Parties to Check References
If a recruiter uses information from a third party to take an adverse action (e.g., refuse to refer a candidate, etc.), the recruiter must inform the candidate of the adverse action taken and must provide the candidate with the name, address and telephone number or the firm that provided the information to the recruiter, along with a statement that the reference checking firm did not make the decision to take the adverse action which the recruiter has chosen to take.
Liability to the Employers for Failure to Check References
Views differ in the industry regarding the role which personnel consulting firms should play in verifying the accuracy of information supplied by a candidate and passed along to an employer.
State courts have rejected the position that personnel consultants are not required to verify the credentials of candidates (Texas case involving PB-KBB, Inc. and Diversified Human Resources Group, Inc. involving the credentials of a graduate engineer candidate) and found in favor the employer.
One way for personnel consulting firms to reduce the chances of litigation over reference checks it state in writing, and most logically in the in the fee agreement, what it does and does not do regarding: a) checking a candidate’s references, b) checking educational credentials, and c) checking criminal records.
Keck vs. American Employment Agency
tested the responsibility of a placement firm to check employer credentials. While the circumstances in this case were not typical, the finding of negligence against the firm is sufficient to call attention to the importance of errors and omissions insurance as a sound business investment.
Third Party Liabilities — Gutzan v. Altair Airlines and Romac & Associates
showed how a recruiter and/or personnel consulting firm can be liable to a third party injured by its candidate.
Excluded Communications
c
