Bucks Writs - Summer 2018 - 30
feature
Background Checks:
Employers' Compliance With The Fair Credit Reporting Act
- By Kyong Ha Growney, Esq.
Conducting a background check for
an applicant for employment or a
current employee seems pretty straightforward. However, if an employer
orders background checks through
a third party company, who is in the
business of compiling background
information, the employer is subject to
the Fair Credit Reporting Act of 1970
("FCRA"). Employers who conduct
background checks themselves and do
not use a third party company are not
subject to the FCRA.
"Consumer reports" under the FCRA
include criminal records, motor vehicle
records, employment history, credit
checks, education checks, etc. Before
an employer can obtain and/or use
"consumer reports" from a third party
company, it must comply with all of the
requirements of the FCRA.
disclosure with the written authorization into one document.
3. Pre-Adverse Action Notice - If an
employer plans to take adverse
employment action based on
information in a consumer report
(e.g. turning down an applicant
for employment or terminating
an employee based on criminal
records or motor vehicle records),
the employer must provide a
pre-adverse action notice. This
notice must be in writing and must
include a copy of the consumer
the pre-adverse action notice. The
notice must contain: the name,
address, and phone number of the
reporting agency; a statement that
the reporting agency did not make
the adverse decision and cannot
give specific reasons for it; that the
applicant/employee can dispute
the accuracy or completeness of
any information in the consumer
report; and that the applicant/
employee has the right to obtain
an additional free copy of the
report from the reporting agency
within 60 days.
There are four main compliance
requirements under the FCRA related to
consumer reports obtained or used for
employment purposes:
1. Initial Notice and Disclosure -
Before obtaining a consumer
report, an employer must give the
applicant/employee a "clear and
conspicuous" disclosure that a
consumer report may be obtained.
The notice must be a standalone
document without any other
notices or unrelated information.
The notice should not be included
in the application for employment.
2. Written Authorization - The
employer must also obtain written
consent from the applicant/
employee before obtaining a
consumer report. Employers can
combine the initial notice and
report and a description of the
applicant/employee's rights under
the FCRA. The intent of this notice
is to give the applicant/employee
a reasonable period of time to
contest the accuracy or legitimacy
of the report's contents.
4. Final Adverse Action Notice - If
the employer plans to continue
with its adverse action (e.g.
deny employment or terminate
employment) based on the
consumer report, the employer
must provide the applicant/
employee with a final notice of
adverse action after a reasonable
period of time has passed from
30
Employers who fail to comply with the
FCRA can be liable for actual damages,
penalties, costs, and attorneys' fees.
In addition, if it is determined that
there was "willful noncompliance,"
an employer may also face punitive
damages. In recent years, there has
been an increase in both individual and
class action lawsuits against employers
for violation of the FCRA. Given the
potential exposure involved, employers
should review their policies and
practices relating to background checks
to ensure compliance with the FCRA
and consult with legal counsel prior
to obtaining any consumer reports or
taking any adverse employment actions
based on such reports.
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