Employers that use the services of a consumer reporting agency (e.g., a third-party vendor) to conduct background checks on their prospective or current employees must now use an updated “Summary of Rights” form to notify applicants and employees of their rights under the federal Fair Credit Reporting Act (“FCRA”).
The FCRA regulates the means by which an employer may obtain and use a “consumer report,” which it defines to include “any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for,” among other things, employment, promotion, reassignment or retention as an employee. Before a consumer report can be used in making employment decisions, the FCRA requires the employer to notify the subject of the background check (i.e., the job candidate or employee) in writing that it will be obtaining such a report and that the report will be used for employment purposes, and to obtain the prospective or current employee’s written authorization for the employer to procure the report. If the consumer report being obtained is an investigative consumer report involving personal interviews with people who know the applicant or employee, then, before obtaining the report, the employer also must provide the subject of the background check with the Summary of Rights form. The Summary of Rights form, together with a copy of the consumer report, also must be provided to an applicant or employee prior to an employer taking any adverse action (e.g., rejecting the applicant, denying a promotion, or terminating the employee) based upon the report.
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Topics: Background Checks, Credit Reporting Agencies, Credit Reports, FCRA, Notice Requirements, Summary of Rights
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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