What Employers Should Know About The Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) provides employees certain rights regarding credit checks and general investigative background checks obtained from third parties. The FCRA also governs the disclosure of "consumer reports," which includes information provided by consumer reporting agencies that address credit, character, general reputation, personal characteristics or mode of living. The Federal Trade Commission has an excellent article that explains what specifically consumer reports are and what employers should know about them. To view the article, click here.

Although employers often fail to recognize that the FCRA applies in the employment context, criminal background investigation reports and credit histories generally fall within the FCRA's scope.

The FCRA requires employers to provide employees certain notices and disclosures before requesting a report, before taking any adverse action based on the report, and after taking adverse action based on the report. There are, however, limited exceptions from these notice and disclosure requirements where the report concerns suspected employee misconduct, or compliance with federal, state, or local laws or regulations or preexisting written employer policies.

Yale University has a webpage that discusses the specific rights outlined in the Fair Credit Reporting Act. Although it has been published for the employee, it is very informative from the employers' perspective as well, and worth a read. To view the write-up, clear here.

If the report falls within one of these exceptions, the statute requires only limited employee notice, but still restricts access to the report to individuals or organizations prescribed by statute. 

Comments

[Robert Rutschilling]

I recently went through a lengthy hiring process anad finally was given a formal job offer. The Recruiter then called me and asked for my SS# and birth date,which without my knowledge,he used for a background check. The background check was the reason my job offer was withdrawn. I believe that a written authorization was required for the background check. What can I do?