Historically, before the advent of easily conducted background searches, employment decisions were based purely on personal instincts and connections. Today, it’s surprising how much information an employer can learn about a job applicant by obtaining a background report from a consumer reporting agency, also known as a “consumer report”. However, do not let the ease of access fool you. Any time you obtain a consumer report, for current or prospective employees, you must follow the requirements of the Fair Credit Reporting Act (“FCRA”).
In addition to seeking counsel from an employment attorney before obtaining a consumer report, here are some steps you can take to avoid violating the FCRA:
Step 1: Before seeking a consumer report, get the written consent of the employee/job applicant. Inform the employee/applicant that this information may be used for employment decisions but will not be misused for unlawful discrimination.
Step 2: If, after obtaining the information, you decide to reject a job applicant or demote or terminate a current employee, before taking the adverse action, you must notify the applicant or employee and include a copy of the consumer report you relied on in making the decision and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act”, a document that may be located at the following website: http://www.consumer.ftc.gov/sites/default/files/articles/pdf/pdf-0096-fair-credit-reporting-act.pdf.
Step 3: After the action in “Step 2” is finalized, you must, in writing, notify the employee again. This is termed an “adverse action notice.” Generally speaking, this notice must include certain information about the consumer reporting company that supplied the report, a statement that the consumer reporting company did not itself take the adverse employment action, and a notice of the person’s right to dispute the accuracy of the information.
Now more than ever, organizations around the country are being attacked by class action lawsuits brought under the enforcement provisions of the FCRA. With the fine being about $1,000 per violation, plus attorneys’ fees, multiple employees/job candidates working together can impose a hefty fine on a business. Although we are not aware of a relevant case in Pennsylvania, judges’ decisions in other states indicate that a liability release is not enough to comply with the FCRA—you must actually obtain an employee’s or applicant’s consent.
Although you can take steps to protect your company, the technicalities of complying with the FCRA should be left to a competent employment attorney. Do not hesitate to contact our office if you need help.
The Eastern Pennsylvania Employment Log (EPELog) is a publication of the KingSpry Employment Law Practice Group. Jeffrey T. Tucker, Esquire, is our editor-in-chief. EPELog is meant to be informational and does not constitute legal advice.
