Can Staffing Agencies Share Background Checks or Drug Tests with Clients?

A common question from Staffing Agencies is whether or not they can share background checks or drug tests with clients.  I understand wanting to do it, but I would highly recommend against it.

In sharing drug test results, consider this this FTC opinion letter: https://www.ftc.gov/policy/advisory-opinions/advisory-opinion-islinger-06-09-98.  What it says is that when a staffing agency shares a drug test result that drug test result becomes a consumer report under the Fair Credit Reporting Act (“FCRA”).  That, in turn, makes the staffing agency a consumer reporting agency (“CRA”) under the FCRA and responsible for complying with all the regulations that govern credit reporting CRAs under the FCRA.  This is something that, quite frankly, staffing agencies are not set up to comply with.  Getting into compliance with the FCRA regs for CRAs is something that would be quite costly, and perhaps not even technically possible for them to do.

As it pertains to background checks, there is a federal court case out of Connecticut, Adams v. Nat'l Eng'g Serv. Corp., 620 F. Supp. 2d 31.  That case held that a staffing agency that shared a background check with a client became a CRA under the FCRA.  Again, this is something which no staffing agency is set up to comply with. 

Another thing to consider is whether or not your background check provider or drug testing lab will allow you to share those reports under you contract with them. 

Finally, there are concerns about state privacy laws and suits that could arise from you sharing the results of background checks and drug tests with third parties. 

There are a few options around this when a client asks for those copies of those results.

First, you could agree to provide them if the client is willing to indemnify you for any FCRA violations that might occur as a result of your sharing.  As you know, most staffing clients are allergic to the word indemnify, unless it is you indemnifying them, and will not agree to this.

Second, if they really wanted it, you could increase the rates you charge in order for you to comply with these requirements.  This likely is a deal breaker for multiple reasons, most of which would be price competition with other agencies.

Third, and the option I recommend, is to educate the client as to why you can’t comply with requests for copies of drug tests or background checks.  Then, I would offer them to explicitly lay out the acceptable results on a drug screen or background check in the contract.  You would then attest to the client that all candidates sent to them would meet these requirements provided in the contract.  Most companies are willing to accept this as a reasonable alternative.  If they aren’t, however, the question is what else are they doing that either skirts or flat out violates rules that could put you at risk, and whether or not you want to do business with someone like that.

For further information and a fully compliant background screening solution, visit our partner TopDogHR, who offer an industry leading solution.

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