Obligations of Employment Background Checks Under the FCRA

As I have discussed in several posts throughout the year, new amendments to
the Fair Credit Reporting Act, (“FCRA”) require employers and

credit reporting agencies to provide additional information to
potential and current employees prior to accessing
a credit file for employment purposes.  Employers are also
required to provide additional disclosures after taking adverse
action against the individual based on the information contained in
the report.
 
The FCRA is the federal law
that imposes requirements on employers
who use credit reports when determining whether to hire or
continue employment.  With the new amendments to the law,
employers must embark on a four step process using federally
mandated forms.  These four steps include,
certification to the consumer reporting agency, notice and
authorization from the applicant, pre-adverse action protocol and
adverse action protocol. 

Certification to the Consumer Reporting
Agency
A
credit reporting agency may furnish a consumer report for
employment purposes if the employer certifies that the potential or
current employee granted written authorization for the employer to
do so.  The employer must state that it will use the
information for employment purposes only and it will comply with
the adverse action conditions should adverse action be necessary
based on the information contained in the report. 

Notice and Authorization from the
Applicant
The next step after certification requires the employer to notify
the potential or existing employee that it plans to access the
employers credit file and use the information contained in the
report as a basis in its decision to hire or continue current
employment.  The employee must provide the employer with
written notification that it agrees to allow the employer to access
his or her credit file for this purpose.   

Pre-Adverse Action Protocol
If an employer decides it may use the information contained in the
consumer report to take “adverse action”, an action that denies an
individual credit, employment, insurance or other benefit, it must
provide the employee, whether potential or current, with a copy of
the report as well as a copy of ”
A Summary of Your Rights under the FCRA“. 

Adverse Action Protocol
If based on the information contained in the consumer report, the
employer decides to take adverse action against the employee it
must inform the employee, whether orally or in writing, of its
decision not to hire or continue employment and of the statutorily
required information.  This information includes the name,
address and phone number of the credit reporting agency which
supplied the report; a statement that the credit reporting agency
that supplied the information did not make the decision to take
adverse action; and a notice of the employee’s right to dispute the
accuracy or completeness of any information in the report and to
get an additional free report from the company that supplied the
credit or other background information if requested within 60
days.

If you are having difficulty with information contained in your
credit
report or feel you have not been provided with proper notice of
your rights during the employment process, contact SmithMarco P.C. for a free case review.