Fair Credit Reporting Act

Fair Credit Reporting Act Factsheet:

The Fair Credit Reporting Act (“FCRA”) applies employers who obtain “consumer reports” or “investigative consumer reports” about an employee from a “consumer reporting agency.”

  • A “consumer report” includes a criminal background check, educational history check, credit check, license check, driving history, personal characteristics, lifestyle, etc.  “
    • Consumer report” does not include investigation of employee misconduct or certain reports in the trucking industry.
  • A “consumer reporting agency” is a company regularly engaging in assembling or evaluating consumer credit information.
    • When employers conduct their own investigations of an employee’s background, the FCRA does not apply
  • An “investigative consumer report” is a report into an employee or prospective employee’s background using at least some personal interviews.
  • In this Factsheet “employee” also includes “prospective employee.”
  • FCRA applies to all employers, regardless of size

Prior to seeking a consumer report, an employer must:

1.     Provide the employee with written notice of its request for a credit report in a stand-alone document

  • Before seeking an investigative report, other, additional notice must be provided;
  • Before seeking medical information in a consumer report, employers must provide the employee with “clear and conspicuous language” describing how the information will be used and how the information is relevant.

2.     Obtain the subject employee’s written permission (which can be done by signing the stand-alone document referenced above);

3.     Certify to the entity providing the report that the employer has complied with FCRA;

If the report is used, in whole or in part, as the basis for an adverse employment action (such as termination, demotion, or failure to hire) against the employee, the employer must:

1.    provide a copy of the report to the employee and the FTC’s summary of rights.

2.   after waiting a reasonable amount of time, advise the employee of:

  • the adverse employment action,
  • the name of the consumer reporting agency,
  • the fact that the consumer reporting agency did not make the adverse employment decision and cannot give the individual reasons for the adverse employment action;
  • the fact that the individual has a right to dispute the information in the report, and
  • the fact that the individual of his or her right to request free copy of report.

Additional measures are required when an “investigative consumer report” is used as the basis for an adverse employment action.

Consumer reports must be disposed of in a reasonable manner, according to the Fair and Accurate Credit Transactions Act.

If an employer receives notice of an address discrepancy, the employer must take reasonable measures to ensure that the report is about the individual for whom the report is being sought.

This factsheet is provided as courtesy education to the general public and is not intended to be legal advice.  To see how the FCRA applies to your particular situation, contact Muller Law, LLC.