Monthly Archives: November 2014

EMPLOYEE BACKGROUND CHECKS

A job candidate has authorized an employer to obtain a background check and credit report. The applicant has a poor credit history and an arrest. The employer turns down the application based in whole or in part on the applicant’s negative credit history and arrest. What procedures must the employer follow? Those set forth in the Fair Credit Reporting Act (FCRA).
Under the FCRA, before an employer may obtain a consumer report from a credit reporting agency (CRA), it must first notify the individual in writing in a single document that a report may be used. The employer also must obtain the person’s signed authorization. 
If the employer then relies on a consumer report prepared by an agency to deny a job application, reassign or terminate an employee, deny a promotion, or take other adverse action, the FCRA requires the following steps:
Step 1: Before you take the adverse action, you must give the individual a pre-adverse action disclosure that includes a copy of the individual’s consumer report and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act” — a document prescribed by the Federal Trade Commission. The CRA that furnishes the individual’s report will give you the summary of consumer rights.
Step 2: After you’ve taken an adverse action, you must give the individual notice that the action has been taken in an adverse action notice. It must include:

  • The name, address, and phone number of the CRA that supplied the report;
  • a statement that the CRA that supplied the report did not make the decision to take the adverse action and cannot give specific reasons for it; and
  • a notice of the individual’s right to dispute the accuracy or completeness of any information the agency furnished, and his or her right to an additional free consumer report from the agency upon request within 60 days.

(Source: Federal Trade Commission; 15 U.S.C. § 1681 et seq.)

Obtaining background checks can be an effective way for employers to weed out undesirable employees. Weeding out potentially bad employees can save substantial amounts of time and money for employers and also decrease the risk of employee theft and dishonesty. In your efforts to ensure that you hire the most qualified employees with the best backgrounds, comply with the FCRA. If you do not follow the law the consequences can be severe — the FCRA allows individuals to sue offending employers for damages in federal court.