Fair Credit Reporting Act and Employee Background Checks
Employer violations of the Fair Credit Reporting Act are on the rise, leading to an increase in class action lawsuits. The most common issue leading to class action lawsuits is the manner in which employers obtained and used consumer reports about job applicants, to include credit reports and criminal background checks.
The Fair Credit Reporting Act, or FCRA, requires employers to (1) disclose to applicants, in a document containing only the disclosure, that the employer may request a consumer report about the applicants and (2) obtain applicants' authorization to request the consumer report. Both of these steps must be completed before a consumer report is obtained. Employers are permitted to combine the disclosure and the authorization into one form, but some employers include additional information in their disclosures and authorizations, such as explanations of at-will employment, explanations of privacy policies, and requests for additional information about an applicant that arguably is unrelated to the request for consumer reports. It is the inclusion of this additional information, and the omission of the term “consumer report” from those documents, that has resulted in recent class action lawsuits.
Further, if an employer intends to make an adverse decision (such as deciding not to hire or promote) based on information contained in a consumer report, the FCRA requires the employer to follow a detailed process that includes providing the applicant with a pre-adverse action notice and a subsequent adverse action notice. The pre-adverse action notice should include, among other information, a copy of the consumer report the employer will rely on for its decision and a document known as “A Summary of Your Rights Under the Fair Credit Reporting Act,” which the company hired to generate the consumer report should provide to employers.
Federal Trade Commission
As described above, when employers use consumer reports to make employment decisions, including hiring, retention, promotion or reassignment, they must comply with the Fair Credit Reporting Act (FCRA). The federal agency responsible for enforcement of the FCRA is the Federal Trade Commission (FTC).
The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. For more information on the use of consumer reports by employers visit FTC's website dedicated to the topic by clicking here.
Do you feel you've been a victim under the Fair Credit Reporting Act?
Are you concerned about your employer's background check procedures?
If so, contact leading California employment lawyers from Kingsley & Kingsley to discuss the FCRA and the proper use of background checks. To get answers to your questions or to discuss your specific case, call us toll-free at (888) 500-8469 or click here to contact us regarding your case.