Recently I wrote about ADP’s 12th Annual Screening Index summarizing employment screening and hiring trends. Employers using third-party background screening services must remember to comply with the Fair Credit Reporting Act’s (FCRA) procedures prior to using consumer reports, in whole or in part, employment taking employment actions. Moreover, while Texas has no specific statutes governing use of consumer reporting information in the employment context, some states have laws or regulations imposing more restrictive requirements than the FCRA that must also be followed.
In summary, the FCRA requires employers using consumer reports (i.e., information about your personal and credit characteristics, character, general reputation, and lifestyle) to:
- Disclose, in writing, your intent to obtain consumer reporting information before requesting the information;
- Obtain written authorization to obtain the consumer reporting information before requesting the report;
- Prior to taking an adverse employment action, provide the applicant/employee with pre-adverse action notification containing a copy of the report and a summary of rights under the consumer reporting act;
- After taking the adverse employment action, provide the applicant/employee with post-adverse action notification that contains the name and contact information of the consumer reporting agency (CRA) that prepared the report; a statement that the CRA did not make the decision and advising the individual of his or her right to dispute the information in the report with the CRA within 60 days.
Background checks and pre-employment screening are effective tools to use in hiring qualified employees. Doing so, however, without understanding an employer’s obligations under state and federal law, can give rise to liability. The Federal Trade Commission enforces the FCRA. For more information on an employer’s rights and obligations under the FCRA, click here.
Earlier: Annual Survey of Employment Screening and Hiring Trends Released.