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Improper Background Checks and the FCRA: an Overview

Improper Background Checks and the FCRA: an Overview

fcra-background-checkUnder the Fair Credit Reporting Act (FCRA), if an employer seeks to terminate a current employee or to not hire an applicant because of information contained in a criminal or consumer background report, there are certain requirements must be met. To begin, employers must make a clear and conspicuous disclosure in writing to the consumer before any background report is sought and ordered. Before an employee or applicant can be subject to an “adverse action”, they must be provided a copy of the report. Additionally, they must be provided advance notice that an adverse action may be taken against them because of the report. This is to allow employees and applicants the chance to review the report and explain any errors or misleading information therein.

The employer must also notify an employee or applicant of their rights under the FCRA. If it does take an adverse action based on the background check, the employer must provide written notice of the action and the background check. This is known as the “Final Adverse Action.” Special rules apply when an employer gets a background report from a company in the business of compiling background information:

  • Before ordering the report, the employer must tell the employee or applicant that they might use the information to make a decision related to her employment, and must ask for her written permission. She doesn’t have to give permission, but if she is applying for a job and doesn’t give permission, the employer may reject the application. If an employer gets a background report on any applicant without their permission, they should contact the FTC at ftc.gov or at 1-877-FTC-HELP.
  • If the employer thinks they might not hire, keep, or promote the employee or applicant because of something in the report, they must give him a copy of the report in the question and a “Summary of Rights” that tells him how to contact the company that provided the report. Background reports sometimes have mistakes. If he sees a mistake in his, the applicant should ask the reporting company to fix it, and to send a copy of the corrected report to the employer, telling the employer about the mistake, too.

Because their background checks may contain false or misleading information, it is crucial that employees and job applicants review their reports. Individuals often fail to review their background reports and, due to false or misleading information, suffer an adverse employment action. Also, information may be reported that is prohibited by law. For instance, not all criminal matters can be legally reported. Non-convictions, for example, are generally prohibited from a criminal background report if they occurred more than seven years prior. Likewise, certain misdemeanors are also generally prohibited from disclosure if during the same time frame.

If the employer does not hire or promote an individual because of information in his or her criminal history or other public records, the employer must tell them orally, in writing, or electronically:

  • the name, address, and phone number of the company that supplied the criminal history or public records report;
  • that the company that provided the information didn’t make the decision to take the adverse action and can’t give specific reasons for it; and
  • that the subject of the report has the right to dispute the accuracy and completeness of any information in it, and to an additional free report from the company that supplied it, if he or she makes the request within 60 days of the employer’s decision not to hire or retain them.

Still, an employer may ask an employee or applicant for a wide range of information about their background, especially during the hiring process. For example, some employers might ask about employment history, education, financial history, medical history, or even use of online social media. They’re not, however, permitted to ask for medical information until they offer you a job, and they’re not allowed to ask for genetic information, including family medical history, except in limited circumstances. And, when an employer asks about background, they must treat the applicant or employee the same as anyone else, regardless of race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age if 40 or older. An employer is not allowed to ask for extra background information because you are, say, of a certain race or ethnicity.

Also, if an employer decides not to hire, keep, or promote a worker based on financial information in a background report, it must tell them so. Specifically, the employer must:

  • give the subject the name, address, and phone number of the company that supplied the credit report or background information;
  • give the subject a statement saying that the company that supplied the information didn’t make the decision to take the adverse action and can’t give you any specific reasons for it; and
  • give the subject a notice of his or her right to dispute the accuracy or completeness of any information in their report and to get an additional free report from the company that supplied the credit or other background information — if they ask for it within 60 days.

Sometimes, it’s legal for an employer not to hire you or keep you on because of information in your background, and sometimes, it simply isn’t. It is illegal when the employer has different background requirements depending on your race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age, if you’re 40 or older. It’s also illegal for an employer to reject applicants of one ethnicity with criminal records for a job, but not to reject other applicants with the same criminal records. Even if the employer treats all applicants the same, using background information can be illegal discrimination. Employers should not use a policy or practice that excludes people with certain criminal records if it significantly disadvantages individuals of a particular race, national origin, or another protected characteristic without accurately predicting who will be a responsible, reliable, or safe employee. Such a policy or practice has a “disparate impact” and is not “job related and consistent with business necessity.”

We have helped individuals receive compensation for violations of the FCRA by employers. On an individual basis, and through class action lawsuits, we have successfully compelled companies to change their policies to conform with the law and to compensate consumers for violations of the FCRA.

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