Compliance in the Sharing Economy: What You Need to Know

Posted Wednesday, November 15th, 2017 by Laura Sankowich

Regulation Round Up

As we head into 2018, background checks continue to receive regulatory scrutiny related to compliance in the sharing economy.  While there is no national standard for background checks in the gig economy,  companies still have a vested interest in keeping community members safe.  In the mean time federal, state and municipal governments continue to debate what constitutes an appropriate background check for various segments of the sharing economy.

Whether your company focuses on transportation, short-term housing, or temporary job assignments, background checks are critical.  As an employer you need to screen job candidates, and run rechecks on existing employees to deliver safe, reliable service to your customers.  However, like many sharing economy companies you might be struggling with how to keep up with rapidly changing regulatory requirements.  This post is a quick primer on the key legislation that may affect your background screening process.

Fair Credit Reporting Act (FCRA)

First in the line of regulatory requirements to be aware of is the federal Fair Credit Reporting Act (FCRA).  The FCRA outlines how to inform candidates of background checks, how to use associated data, and how to manage the data once a check is complete.  A key takeaway for companies related to the FCRA includes understanding how your background screening partner complies with these standards.  Another important thing to look for is National Association of Professional Background Screeners (NAPBS) certification for the FCRA.   NAPBS certification signifies your background screening provider has a core understanding of foundational information of the FCRA.

“A key takeaway for companies related to the FCRA includes understanding how your background screening partner complies with these standards.”

Ban The Box

Ban the Box prevents employers from asking job applicants about their criminal history on the initial applications.  In fact, Ban the Box legislation is spreading rapidly across the United States.   More than 24 states and over 150 cities and counties have adopted laws associated with Ban the Box.  Ban the Box laws will continue become more the rule than the exception when background screening potential employees.  It is important for companies to understand all associated legislation as it determines what criteria can be used to vet a candidate in a background screen.

Transportation and Zoning Laws

Other areas where sharing economy companies are seeing legislative activity includes transportation and lodging.  The division between a platform’s managers and its users creates a regulatory blurry line.

Transportation Sharing Economy

Both Uber and Airbnb have gotten pushback over taxi and hotel regulations in cities such as New York and San Francisco.  For example, some ride sharing companies compete with taxi companies and don’t require the same level of insurance or screening.  Additionally, temporary rentals may not always comply with local zoning laws.  Sharing economy consumer protections are evolving.  Going forward drivers and property owners may receive more thorough background checks and maintain a minimum level of insurance coverage. 

California established a new category of motor vehicle carriers known as Transportation Network Companies that do not recognize ride sharing companies as a taxi service and require drivers “to have certain insurance, perform background checks, and maintain drug and alcohol policies to ensure drivers are law abiding.”  Washington, D.C.’s “Vehicle for Hire Innovation Amendment Act,” is also aimed at regulating sharing economy transportation.  The act enforces background checks and inspections, and specifically discourages the manipulation of fare charges. 

Work in Progress

It is still early days with regard to the emerging regulatory landscape in the sharing economy.  However, it is clear background checks are a key focal point for compliance in the sharing economy.  The Sterling team has deep subject matter expertise when it comes to understanding regulatory requirements.  Our team of compliance professionals continuously monitors legislative and regulatory bodies to ensure our customers are compliant.  Learn more about how we can help you keep your background checks compliant talk to us.

Disclaimer: This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.

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