August 23, 2018
Estimated Read Time: 3 Minutes
Background checks on Independent Contractors are a tricky topic; however, understanding the importance of how to properly screen an independent contractor who may be working at your house or alongside you at your employer, is strongly encouraged. Even though that contractor may only be there for a short period of time, performing a background check on them could save you from many problems down the line.
So, what and whom is an Independent Contractor?
According to the Internal Revenue Service, an independent contractor is a person who is in an independent trade, business, or profession in which they offer their services to the general public. . The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers are generally independent contractors.
So, what does the FCRA say about it?
Generally speaking, employers may conduct background checks on all individuals performing work at their worksites including independent contractors and other contingent workers. While the Fair Credit Reporting Act (FCRA) is silent on the matter of independent contractors, it would likely apply to any of these checks when an employer uses a third-party to procure the report. The Federal Trade Commission (FTC) has opined that the FCRA’s definition of “employment purposes” covered by the act would include checks conducted on independent contractors. It claimed that an “employment relationship” still exists if background checks for independent contractors are a condition of hiring. Therefore, it triggers the protections of the FCRA.
The FTC’s Staff Report provided an interpretation of this often misunderstood concept … “[the FCRA] may apply to situations where an entity uses individuals who are not technically employees to perform duties. Thus, it includes a trucking company that obtains consumer reports on individual drivers who own and operate their own equipment; a title insurance company that obtains consumer reports on individuals with whom it frequently enters into contracts to sell its insurance, examine title, and close real property transactions; or a nonprofit organization staffed in whole or in part by volunteers.
In efforts to protect coworkers, the public, and their own company, employers choose to screen all applicants prior to them entering their facility. Many feel the risks with independent contractors are even greater based on the transient nature of their work….. Now, knowing the FCRA allows the screening of non-employees such as independent contractors, why do some companies still treat them differently?
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