Pre-employment Background Checks: Are You Meeting the Requirements of The Fair Credit Reporting Act?

One of the issues being discussed in the wake of the mass shooting in Orlando is the utility of pre-employment background checks of prospective employees. Many companies conduct pre-employment background checks, hoping to screen out unsuitable job applicants. However, many employers are not aware that the requirements of the Fair Credit Reporting Act (FCRA) can apply to such background checks. As a result, some companies have been sued for violations of the FCRA.

The FCRA has some very specific notice requirements. Under the FCRA, before ordering information for employment purposes pertaining to an applicant, an employer should:

    ●    Disclose to the applicant in writing that a "consumer report" will be ordered. The disclosure must be separate from the application

    ●    Obtain written consent from the applicant to use such a consumer report.

    ●    If an employer orders a report and does not hire an applicant based upon information in the report, an employer should:

    ●    Give the applicant a copy of the report and provide a summary "bill of rights" before taking the adverse action

    ●    Provide oral, written, or electronic notice of the denial and where the applicant can obtain a copy of the report on which the denial is based.

Additional requirements apply when the report contains information obtained through personal interviews. The FCRA calls such an investigative consumer report. Additional requirements also apply when the report contains medical information.

    Waffle House is currently the defendant in a class action lawsuit involving alleged violations of the FCRA. The suit, filed by a Florida man, claims Waffle House failed to inform him a background check was being conducted, that they failed to inform him they were considering not hiring him due to problems with his credit, and that they failed to notify him that he hadn't been hired. He's seeking a jury trial and an undisclosed amount of damages. Other major companies, such as Chipotle, have also been sued for similar violations of the FCRA.

If your company intends to conduct background checks of applicants, or if your company is already conducting pre-employment background checks, it is advisable to have competent employment counsel review the documents and procedures related to those background checks to ensure compliance with the FCRA.
<