Compliance: Can you require applicants to pay for their background checks?

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This is an issue that we see from time to time. Either a client will invoice their applicants for the cost of a background check, or they will arrange for their applicants to contact the CRA directly to purchase a check. While this is currently legal in most states, there are a few potential issues you may want to consider.

Ownership: When an applicant pays for a background check, who owns the check? Does your company still have the right to access and use that background check for employment purposes?

Payment: Are you going to have the CRA invoice you, and then you invoice your applicants? Will you collect payment up front? Or will the applicants purchase directly from the CRA? How will this affect your pricing?

Best Practice: While it is legal to have the applicant pay in most states, several states have explicitly limited the procedure or outlawed it completely. It is also a potential issue that may be addressed in the future by the Equal Employment Opportunity Commission (EEOC) or the Consumer Financial Protection Bureau (CFPB). Furthermore, most employers do not ask their applicants to pay for background checks, drug screens, or other administrative items used in determining eligibility for employment.

Regardless of what you choose, it’s important to consult your legal counsel to make sure that your procedures are compliant with the Fair Credit Reporting Act (FCRA) as well as local and state laws.