Many employers conduct background and credit checks on job applicants and employees by obtaining “consumer reports” from outside agencies. Sometimes these reports contain outdated or inaccurate information. A consumer report cannot include negative information that is more than seven years old or bankruptcies that are more than 10 years old.
To protect workers from being harmed by this practice, the FCRA requires employers to follow very specific rules in conducting these background and credit checks. Unfortunately, employers don’t always follow these rules. Big employers like Home Depot and Panera have recently been sued for violating the FCRA.
Employers must provide proper notice.
Before getting a consumer report, an employer must:
- Disclose that the employer will get a consumer report on job applicants and employees.
- This disclosure must be:
- Clear and conspicuous – it must draw the employees’ attention;
- In writing;
- In a “stand-alone” document – it must be on its own page. This means that the disclosure cannot be on the same page as other sections of the employment application.
- Get authorization from the employee or job applicant to obtain the consumer report. This authorization must be in writing (or electronic signature). It can be on the same page as the employer’s notice.
Employers can only take “adverse action” based on the reports after following specific procedures.
- An “adverse action” includes firing, rejecting an application, reassigning an employee, denying a promotion, etc.
- BEFORE an employer can take any adverse action against an employee or job applicant (such as firing or not hiring) because of a consumer report, the employer must:
- Inform the employee or applicant about the potential adverse decision;
- Provide the employee or applicant a copy of the consumer report on which the decision was based;
- Provide the employee or applicant of a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act,” including the right to dispute inaccurate information in the report.