Staffing agencies encounter this request frequently – a client doesn’t want to commit to hire an applicant until it can review and approve the applicant’s background check report.
This is, however, problematic because preparing and/or furnishing consumer reports to third parties, such as clients, for a fee could cause the staffing agency to meet the definition of a “consumer reporting agency” (“CRA”) under the Fair Credit Reporting Act (“FCRA”). 15 U.S.C. § 1681a(f).
CRAs are subject to a number of stringent obligations under the FCRA. Staffing agencies that rely on outside CRAs to create background check reports for their candidates cannot realistically comply with all FCRA obligations placed on CRAs because they do not have anything to do with the generation of the background check reports.
Depending on facts and circumstances, staffing agencies that improperly supply background check reports to their clients could face exposure for FCRA violations, negligence, defamation, and negligent or intentional infliction of emotional distress, among others.
So what should staffing agencies do?
In lieu of providing the actual background check, it’s generally better for staffing agencies to provide a certification indicating that they have obtained a report from a third party CRA, reviewed the report, and confirmed that the report meets the terms of the underlying agreement between the staffing agency and the client. This is a widely accepted practice in the staffing world, and can save staffing agencies from liability later.