Amendments to the Fair Credit Reporting Act

The Fair
Credit Reporting Act
(“FCRA”) is the federal law Justice _scalethat governs the credit reporting agencies’
conduct on consumer reporting.  As of January 1, 2013 the FCRA
underwent amendments concerning the access of arrest and conviction
records in employment decisions.  The FCRA imposes
requirements on employers who use the credit
reporting agencies to obtain reports on potential or existing
employees with information regarding background checks, credit
checks and previous employment history. 

This recent amendment requires more restrictive compliance when
compiling information on a prospective or existing employee by
requiring the use of a federally mandated form and following a
four-step process.  Below is a list of the four steps as well
as an explanation of each step that an employer must follow to
comply with the FCRA.

Step One:
Employers must provide “certification” to the Credit
Reporting Agencies

A credit reporting agency (“CRA”) may provide an employer with a
consumer report for employment purposes after the employer provides
the proper certification.  Certification is proof that the
employer notified the prospective or existing employee that it
requested a consumer report for employment purposes in
writing.  The employer, in response, must obtain written
authorization from the prospective or existing employee to access
the report for this permissible purpose.  Should the report
contain information that negatively affects its employment
decision, the employer must comply with the conditions for taking
adverse action as prescribed by the FCRA. 
Lastly, once a consumer report is distributed to a potential or
current employer, the CRA must also provide the employer with copy
of the laws mandating the use of consumer reports and the
obligations of users pursuant to the FCRA.

Step Two:
Employers must notify the employee that the
information obtained in the consumer disclosure may be used in
making its employment decision

The employer must obtain written permission from the potential
or current employee in a direct manner.  Furthermore, if an
employer requests an “investigative consumer reports” (i.e., a
consumer disclosure where information regarding a person’s
character, reputation and personal characteristics is obtained
through interview) on potential or current employees it must also
inform the employee that such a report may be obtained. Notice must
be provided to the employee in writing and sent by mail or
personally delivered and is time sensitive.  The notice must
also include a statement of the employee’s rights pursuant to the
FCRA as well as the employee’s right to request the nature and
purpose of the employer’s request.   

Step Three:
Employers must provide the employee with proper notice
should the information obtained in the consumer report adversely
affect its employment decision

After accessing a consumer report, if based on the information
reported, an employer makes a decision either not to hire a
prospective employee or to terminate the employment of an existing
employee, the FCRA requires the employer to provide the employee
with a copy of the report and a copy of the employee’s rights under
the FCRA before it takes action.  This notice allows the
employee to exercise his or her rights under the FCRA and dispute
any potentially inaccurate negative information with the CRAs that
may have been the cause of not being hired or losing existing
employment.   

Step Four:
Employers must inform the potential or current
employee of its intent not to hire or to terminate employment
either verbally or in writing

After making the decision not to hire or to terminate employment
based on information obtained in a consumer report the employer
must provide the name and address of the CRA who provided the
report, a statement that it was the employer and not the CRA that
made the employment decision and an explanation that the employee
has the right to dispute information contained in the report and
request a copy of a report free of charge within 60 days. 

When you have problems with your credit report, you have
rights,  and we’re here to help.  SmithMarco, P.C. has been protecting
consumer rights since 2005.  If you feel that you’re rights
have been violated, please contact us
for a free case review.