Why Staffing Agencies Shouldn't Share Background or I-9 Information

Staffing agencies jump through hoops to provide their clients with the best, most qualified candidates and stay competitive.  Background checks and drug tests are often essential, and expensive.  These screening tools assure staffing agencies that their candidates are appropriate for placement, but what should staffing agencies do when the client demands more than just a certification of the candidate’s qualifications?

Sharing the results of a client’s background check or drug test may seem like an easy way to keep clients happy, but it comes with some serious pitfalls for staffing agencies.  There are three ways that sharing background check or drug test results with clients could put staffing agencies at risk of serious liability.

Sharing the results of a background check or drug test with a third party could put a staffing agency in breach of its contract with the background check or drug test provider.  Provisions prohibiting the party requesting the background check from disclosing the results are often found in the fine print of contracts between employers and consumer reporting agencies (CRAs).  A staffing agency that shares background check with its clients could risk monetary damages for breaching that contract, and could end up severing its relationship with a trustworthy, thorough CRA.

Another potential pitfall arises when a staffing agency shares background check or drug test results with the client, and the client discloses or fails to safeguard that private information.  When a candidate’s private information becomes public, the staffing agency that disclosed the information faces exposure for negligence, defamation, negligent or intentional infliction of emotional distress, and other claims.  Even if the staffing agency clearly informs the client that the information is confidential, the staffing agency can still be liable if the information is leaked by the client.

Finally, a staffing agency that shares the results of a background check or drug test with a client can be considered a CRA, which then subjects the staffing agency to a host of Federal Trade Commission requirements that no staffing agency is equipped to meet.  If a staffing agency passes on background check results, then the staffing agency, in the eyes of the law, becomes a CRA or background check provider.  This is an impossible situation to be in, as the staffing agency had no role in generating the results of the background check or drug test and is therefore held legally responsible for something beyond the staffing agency’s control.  This is not mere speculation: this is based on an actual lawsuit against a staffing agency, and the court’s decision was reinforced in a Federal Trade Commission guidance letter.

When it comes to background checks and drug tests, your best course of action is to provide the client with a signed attestation that you have conducted background checks and drug tests, and the outcomes met the client’s standards.  It may be tempting to give in to a client’s request for background check and drug test results, but the risks of doing so far outweigh the rewards. 

Consult with an experienced myHRcounsel attorney for all of your background check, drug testing, and other onboarding questions.

 

 

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