Lemon Laws

Employment Background Checks
 
 

Errors in Background Checks for Employment

Dispute an Incorrect Background or Employment Check

When thinking of the FCRA and credit report errors, many do not realize that the FCRA covers a much broader range of reports than only credit reports from agencies such as TransUnion, Experian, and Equifax. The FCRA also protects consumers against erroneous reports such as consumer reports that are sold to employers. These reports are used to screen an employee or potential hire in many industries. Thus, a background check report for employment that is inaccurate and results in a termination or failure to gain employment might actually be a violation of your rights under 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.

False Employment Reports and Rights

These background screening or employment reports are used by almost all types of industries and are considered consumer reports or credit reports under the Fair Credit Reporting Act. The law regulates the companies who sell the reports in addition to the employers who use them.

Since the Fair Credit Reporting Act ("FCRA") amended the requirements of conducting employee background checks in early 2013, compliance has never been more important.  Consumers should be cautious and aware of whether or not their potential or existing employers are violating their rights under the statute. Knowing your rights as a consumer is the best preventative action to take to ensure your protection from false employment reports.

1. Employers must submit written consent from the employee prior to requesting a copy of the employee's credit file. 

As of January 2013, the FCRA requires that anytime an employer requests a copy of an employee's credit file for the purpose of a background check, the employer must provide proof of consent from the employee.  Such authorization must clearly show that the employee understands the information requested will be used for the purpose of making employment decisions. 

 2. Employers must disclose their intention to conduct a background check.

The employee must be aware of the employer's intention to conduct a background check and the disclosure must include a statement regarding the type of background check to be conducted, what information will be gathered during the process and how the information will be utilized.  This document must be identical to the document presented to the credit reporting agency when requesting the employee's information.

 3. Employers must follow protocol prior to taking adverse action against an employee.

Should the employer receive information contained in the report requiring them to take adverse action against the employee, prior to taking this action, the employee must be presented with a copy of the information received from the credit reporting agency along with a copy of "Summary of Your Rights Under the FCRA".

 4. Employers must follow protocol when taking adverse action against an employee.

If an employer takes adverse action against an employee, the employer must provide an "Adverse Action Letter".  This letter must include the name, address and telephone number of the credit reporting agency who provided the report; a statement declaring the credit reporting agency is not responsible for the adverse action taken against the employee and that it is not able to provide a reason for the adverse action; a statement that the employee has the right to obtain a copy of the same credit report by making a request within 60 days of the adverse action; and a statement that the employee has the right dispute any inaccurate information contained in the report directly with the credit reporting.

 

Where Does My Employment Report Come From?

See a list of some of the largest consumer reporting agencies that handle employment reports here.

Since employment background checks have become a major factor in the employment field, companies like Equifax Workforce Solutions ("EWS"), a subsidiary of the credit bureau Equifax, have been established for the sole purpose of verifying employment history and income information of applicants. EWS is a separate business from the credit bureau, and claims accuracy of its data as each consumer's information is maintained by the employer who provides it to EWS and it is not distributed to any other background checking company. The service was created to assist employers requesting salary and employment history information of job applicants. EWS states it is in compliance with the FCRA and that it provides your personal information only to those requesting it with a legitimate purpose and the consumer's written consent.

 

Can You Request Your Employment Report?

Unfortunately, unlike with credit reporting agencies, there are no websites set up for you to obtain a free copy of the information reporting on your salary and employment history, but you can however go to each of these companies and request a copy of your information.  The report will likely include all employment records the company has on file for you and will report any companies that have requested your data over the last two years.   

 

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 and am a subject of an inaccurate or false employment report, please contact us for a free case review.

 

 

 

 

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.

 

Disclosure of the Background Check and Releases 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 applicant's best interests.  Once that report is viewed and if it contains false information that prevents a person from getting employment, the FCRA protects consumers.

 

Please contact SmithMarco, P.C. if you feel your rights have been violated. We have over 30 years of experience in protecting consumer rights. Contact us for a free case review today.