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The Fair Credit in Employment Amendment Act

Recently, Washington D.C. joined the ranks among other states to pass the Fair Credit in Employment Amendment Act (“FCEAA”).  The consumer minded act limits an employer’s inquiries into a job applicant’s credit report for use in making hiring decisions.  The basis for this amendment was a belief that credit history cannot be linked to job performance and is not a reliable measure of an employee’s performance. 

While an employer may have different rules for background checks for existing employees, The FCEAA specifically prohibits employee credit checks on potential applicants at any time during the hiring process unless the position is exempt by law.  These exemptions include:

-An employer is required by law to request a copy of an applicant’s credit report;
-An employee working for the Office of the Chief Financial Officer of Washington D.C.;
-An employee that needs a security clearance under D.C. law;
-An employee that is in a law enforcement position;
-An employee that is working in a position at a government office (any government employee);
-An employee of any financial institution, if the position involves access to financial information or funds;

If an employer’s reasoning for accessing a credit file falls under one of these exemptions, the employer must still comply with the Fair Credit Reporting Act (“FCRA”).  Under the FCRA, prior to accessing a credit file, the employer must notify the employee/job applicant that the employer may use the credit report to make a decision on whether or not to hire and the employer must obtain written permission from the applicant.  Before rejecting a potential employee based on information found in a consumer report, the employer must provide the employee/job applicant with a copy of the report and advise him or her of his rights under the FCRA.  The employee/job applicant must be afforded the opportunity to dispute or explain any inaccurate information contained in the report.

Prior to rejecting an applicant based on the information contained in the consumer report, an employer must notify the applicant and include a copy of the consumer report in addition to advising the applicant of his or her rights under the FCRA.  An applicant must also be given an opportunity to review the report and explain any negative information or dispute its accuracy.  Finally, if an applicant is ultimately denied the job, the employer must also give the applicant proper notice of that fact.  Due to the large number of restrictions put on an employer’s use of credit reports during the hiring process, the number of employers who use reports has declined. However, the overall number of employers who review credit reports still remains high.

If you believe your rights have been violated under the FCRA, or you would like more information regarding your state’s laws, contact SmithMarco P.C. for a completely free case review.

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