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Employer Background Checks

Edward Y. Kroub tick border

Partner

Edward Y. Kroub is Consumer Attorneys LLP's most seasoned litigation partner and co-chairs several of the firm’s consumer finance departments.

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About Employer Background Checks

Have you recently been subject to a wrongful background check by a potential employer?  Have you been denied employment based on a background check?  Take action to protect your rights.

In order to ensure the identity and proficiency of a potential employee, many employers run background checks as a part of the employment process.  These background checks often involve the employer pulling and reviewing the potential employee’s credit report and/or hiring an investigative agency to gather background information on the potential employee.  These background checks can reveal a great deal of information on the potential employee to the employer, such as work history, the existence of a criminal record, and other public records.

Although conducting background checks are a vital part of the employment process, employers are required to comply with federal law during their review.  Particularly, the Fair Credit Reporting Act (FCRA) and related laws have several requirements related to background checks that employers and background check companies must follow. Even if a background check company does not consider itself a credit reporting agency (CRA) under the FCRA, the company can still be subject to the FCRA if it reviews and assembles consumer credit information in a report (commonly referred to as a “consumer report”) for a third party.

If an employer gets information from a company that is in the business of gathering and compiling consumer credit information into a consumer report, the FCRA and related laws require the following: The employer must give a written notice to the potential employee that the employer might use the consumer report for decisions related to the potential employee’s employment.  This notice has to be “clear and conspicuous” and separate from the employment application.

  • If the employer intends to request a company to provide an "investigative report"  (which is a report that is based on personal interviews concerning a person's character, general reputation, personal characteristics, and lifestyle) the employer must also inform the potential employee of his or her right to a description of the nature and scope of the requested investigation.
  • Before obtaining the consumer report, an employer is required to obtain the potential employee’s written consent.
  • In fact, the employer must certify to the company from which the employer intends to get a background report that:
    • The employer notified the potential employee and got the potential employee’s consent to get a consumer report;
    • The employer complied with the FCRA’s requirements related to background checks; and
    • The employer won't discriminate against the potential employee, or otherwise misuse the information in violation of federal or state law.

The FCRA and related laws have additional requirements for employers when refusing to hire a potential employee based on information obtained from a consumer report, including the following:

  • Before the employer refuses to hire the potential employee based on a consumer report, the employer must give notice to the potential employee.  The notice must include a copy of the consumer report that the employer relied on in making its decision, as well as a summary of the potential employee’s rights under the FCRA.  The employer must give the potential employee a “reasonable” amount of time to allow the potential employee to dispute any information in the report. The Federal Trade Commission (the government agency tasked with enforcing the FCRA) has stated that 5 business days is generally reasonable.
  • After the employer refuses to hire the potential employee based on a consumer report, the employer must inform the potential employee that:
    • The potential employee was rejected because of information contained in the consumer report, along with the name and contact information of the company that provided the consumer report;
    • The company that provided the consumer report didn't make the hiring decision and can't give specific reasons for the hiring decision; and
    • The potential employee has the right to dispute the accuracy or completeness of the information in the consumer report, as well as the right to get an additional consumer report for free from the company providing the consumer report within 60 days.

 

Frequently Asked Questions

  • What are the penalties for an employer’s violation of the FCRA?

  • Who else is responsible under the FCRA?

  • Can you protect my rights?

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