Recent multi-million dollar settlements highlight the importance for employers of complying with the Fair Credit Reporting Act (FCRA). The FCRA has very specific requirements employers must comply with.
We have discussed these requirements at length in the past, but, employers who run background checks on applicants or employees must do the following:
- Disclosure: Disclose to the applicant or employee that a consumer report, i.e., a background check is going to be compiled on the applicant or employee for employment purposes;
- Authorization: Obtain authorization from the applicant or employee allowing the employer to have the report complied;
- Pre-Adverse Notice: If the employer decides that it may take an adverse action against the applicant or employee in part because of any information that was disclosed in the background report, the employer must provide the applicant or employee notification of that fact and make other required disclosures; and
- Adverse Notice: If the employer is going to take an adverse action against the applicant or employee in part because of any information that was disclosed in the background report, the employer must provide the applicant or notification of that decision and make other required disclosures.
Takeaway: The FCRA is not an easy statute to comply with. In addition, many states have their own background check laws that add additional requirements on employer hiring in their states. It is advisable that employers conducting background checks of any kind on applicants or employees consult with competent counsel before doing so and have counsel review their forms and their processes to ensure they are FCRA compliant in all respects.