Background Checks for Employment and The Fair Credit Reporting Act
Posted: Wednesday, February 15, 2012
A background check for employment that results in a termination or failure to gain employment can lead to violations of the Fair Credit Reporting Act. If part of the interview process requires a background check, or if your continued employment with a company depends upon a background check, you have rights under the Fair Credit Reporting Act. Most background reports used by businesses are considered consumer reports or credit reports under the Fair Credit Reporting Act.
Employer Must Provide Adverse Action Notice
The FCRA requires that before taking any adverse action against a consumer, such as not hiring the consumer or termination if the background check is completed after hiring, the employer must provide certain information to the consumer. This notice is often referred to as an "adverse action notice". An adverse action notice advises a person that a decision was made regarding his or her employment (or credit or insurance) based upon information contained within a credit or consumer report. A proper notice advises the consumer of the name of the consumer reporting agency that provided the report, its contact information, and a statement that provides information on how to obtain a copy of that report. The purpose is to provide a consumer the right to see the information and correct it in the event the report is inaccurate or incomplete. That can happen, for example, if a consumer is the victim of identity theft and a crime is committed in his or her name, or if a court record is inaccurate. The consumer then has an opportunity to set the record straight. We have seen circumstances wherein a consumer report on an individual stated that the person was previously convicted of a felony. However, the crime committed was a simple misdemeanor, and the person's penalty was minor. Having a felony record obviously paints a very different picture of the applicant.
Employer Must Disclose the Background Check and Get Release of Liability
The FCRA also regulates disclosure of information to a consumer that a background check will be performed and the need for a written authorization, including a specific requirement that the disclosure be "in a document that consists solely of the disclosure." Many times the disclosure will contain a release of liability that purported to release the employer as well as any provider of information from any liability, claims, or causes of action related to the information obtained. Any disclosure that contains a release of liability must be a "standalone" document. This means as the word states, the document must be a separate document and apart from all other information provided at that time of the application. In fact, two previous opinions letters from the staff of the FTC have addressed release language and the standalone document issue:
• In one letter, the FTC indicates the form should not consist "solely" of the disclosure. (See the FTC Hauxwell letter)
• Another letter indicates that the FCRA requires a form that is not "encumbered by any other information… (in order) to prevent consumer from being distracted by other information side-by-side with the disclosure." (See the FTC Leathers letter)
The FCRA allows any potential employer to gain access to a credit report of an applicant, so refusing to sign such an authorization would not be in an applicants best interests. Once that report is viewed and if it contains false information that prevents a person from getting employment, the FCRA protects consumers. SmithMarco, P.C., has over 30 years of combined experience practicing law protecting the rights of consumers around the country and handles Fair Credit Reporting Act cases. If you feel that you're rights have been violated, please contact us for a free case review.