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What You Need to Know About the Fair Credit Reporting Act (FCRA)

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As an employer, you should be aware of the law called the Fair Credit Reporting Act or commonly referred to as the “FCRA”. The Fair Credit Reporting Act was enacted to promote the accuracy, fairness and privacy of consumer information contained in the files of consumer reporting agencies. BIB strives to educate our clients in compliance matters and industry best practices.

Conditions exist for furnishing and using consumer reports for employment purposes. Here are some important conditions included in the FCRA that you should be aware of to stay in compliance:

You Need a Permissible Purpose to use a Report. You may use the information on a consumer report for employment purposes only.

Subscriber Must Provide a Disclosure and Obtain an Authorization. Prior to obtaining or causing a “consumer report” to be obtained for employment purposes, you must provide a clear and conspicuous disclosure to the candidate in a document consisting solely of the disclosure that explains that a consumer report may be obtained for employment purposes. The candidate also needs to authorize, in writing, permission for you to obtain the report.

You Must Provide copy of the Report and Rights with any Adverse Action. Before the candidate may be denied employment, or other adverse action taken, in whole or in part on the basis of the report, you will need to send a Pre-Adverse action letter and provide to the candidate: (1) A copy of the report; and (2) a copy of the rights of the consumer entitled: “A Summary of Your Rights Under the Fair Credit Reporting Act.”

Subscriber Can’t Use the Information on the Report to Violate any Other Laws and must keep it Confidential. The information in the report will not be used in violation of any applicable federal or state equal employment opportunity laws or regulations.

 

*This is not legal advice. You should consult with your own legal counsel to develop a legally compliant employment screening policy and base all employment decisions on company’s own policies and procedures.