Due to concerns that applicants were being unfairly denied employment opportunities due to inaccurate consumer reports, Congress amended the Fair Credit Reporting Act (FCRA) to require employers to adhere to certain duties when obtaining an applicant’s consumer report. A failure to adhere to these requirements could lead to an award of actual and punitive damages for the victim.
Consumer Reports
Consumer reports are defined as any written, oral, or other type of communication issued by a consumer reporting agency that contains information concerning at least one of the following:
- Creditworthiness;
- Credit standing;
- Credit capacity;
- Character;
- General reputation;
- Personal characteristics; or
- Mode of living.
Generally, employers who use background checks in their hiring process are required to take steps to:
- Ensure that applicants agree to their consumer reports being used for employment purposes; and
- Notify applicants immediately if information contained in their consumer reports may result in a rejection of their application.
Notice and Authorization
To fulfill these duties, employers must notify applicants in writing before they order a consumer report from an agency. Notice can be included in an application packet as long as it is a separate, clear, and conspicuous document. Employers are further required to obtain the applicants’ or employees’ written authorization before placing an order for a background check.
Adverse Action Notification
When an employer is considering rejecting an application, based either in whole or in part on a person’s background check, he or she is required to notify the applicant by sending a pre-adverse action disclosure. If, within a reasonable amount of time of sending the pre-adverse action disclosure, the employer still wishes to deny employment, he or she must send an official adverse action disclosure containing the following information:
- A copy of the background screening results;
- A copy of the Federal Trade Commission’s (FTCs) document entitled Summary of Your Rights Under the FCRA;
- The name, address, and phone number of the consumer reporting agency who supplied the report;
- A statement explaining that the consumer reporting agency did not make the employment decision;
- A statement about the applicant’s right to dispute the accuracy of his or her background screening results; and
- Notice that the applicant has the right to request a free background check from the agency within 60 days.
Disputes
The FCRA also allows applicants to dispute their results with the original furnisher of the information, if they:
- Identify the disputed information;
- Explain the basis for the dispute; and
- Include supporting documentation as requested by the furnisher.
Furnishers must then conduct a reasonable investigation within 30 days of the request. If the furnisher discovers that the applicant’s consumer report was incomplete or inaccurate, it must notify all consumer reporting agencies that may have obtained the original report.
Penalties
An employer’s failure to adhere to the FCRA can have significant repercussions on employees and applicants. Fortunately, victims can obtain compensation for their losses if they can establish negligence. These costs could include:
- Actual damages up to $1,000; and
- Attorney’s fees.
However, if an employer willfully chose not to comply with the law, victims may also be awarded punitive damages.
An employer’s failure to respect an applicant’s rights under the FCRA can have far-reaching consequences for victims, if you are concerned that your credit report information was used incorrectly or was recorded inaccurately, it is vital to obtain the advice of an experienced attorney who can help protect your rights. Please contact the Kim Law Firm, LLC by calling 855-996-6342 and we will help you set-up an initial consultation.
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Which companies the statute actually regulates
The Fair Credit Reporting Act is written around a defined term: the consumer reporting agency. That phrase covers far more than the three credit bureaus. Any company that assembles information on consumers and sells it to third parties for employment, tenancy, insurance or credit decisions falls inside the definition, which is why employment screening vendors, payroll data brokers and tenant screening services all carry the same accuracy and reinvestigation duties as Equifax or Experian. Naming the right company is the practical first step in any claim.
- First Advantage — an employment screening agency operating at national scale.
- Accurate Background — sells pre-employment reports to employers across the country.
- GoodHire — a screening service oriented toward smaller employers.
- The Work Number — a payroll database treated as a consumer reporting agency for its employment reports.
- Experian Verify — an income and employment verification service with the same obligations.
- Experian — a nationwide bureau whose files sit behind many screening products.
If a decision went against you because of a report, identify the entity that compiled it before doing anything else, because your dispute has to reach that company to trigger the statutory reinvestigation clock. Ask for your complete file, compare every entry against your own records, and dispute in writing with copies of whatever documentation contradicts the report. An agency that cannot verify an item has to remove it, and a company that keeps reselling a record it already failed to verify is a separate problem worth raising with a lawyer.
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