As of January 1, 2013, employers must use a new Summary of Fair Credit Reporting Act Rights notice when advising applicants or employees of adverse actions taken because of information obtained from a background check or credit check. The updated notice simply reflects that the newly created Consumer Financial Protection Bureau now has responsibility for interpreting the Fair Credit Reporting Act (“FCRA”).
While the change to the notice is simple to implement, employers should take this opportunity to ensure they are complying with the FCRA:
- Before requesting a report: Employers who use “consumer reports” like credit checks and background checks must notify the applicant or employee in writing about their intent to obtain such reports and must obtain written consent.
- Before taking an adverse action based on the report: The employer must provide a copy of the report and issue a copy of the Summary of Fair Credit Reporting Act Rights notice.
- After taking an adverse action: The employer must provide notice of the adverse action. The notice must include:
- the name, address, and phone number of the consumer reporting company that supplied the report;
- a statement that the company that supplied the report did not make the decision to take the unfavorable action and can’t give specific reasons for it; and
- a notice of the employee’s or applicant’s right to dispute the accuracy or completeness of any information the consumer reporting company furnished, and to get an additional free report from the company if requested within 60 days.
- When the report is no longer being used: The employer must securely dispose of the report so it cannot be reconstructed, such as by shredding or burning.
With states limiting the use of credit checks and the Equal Employment Opportunity Commission (“EEOC”) advising employers to avoid background checks in many cases, employers should ensure using consumer reports remain beneficial. If they choose to do so, they should ensure they are in compliance with state laws, EEOC guidance, and the FCRA.
Brody and Associates regularly advises management on complying with state and federal employment laws. If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.
