Have you ever been denied employment because of a criminal or credit background check? Have you ever been fired from your employment for the same reason? Many people have but very few realize that the law governing this process is often violated by the employer. Not sure? Here is some background information on the law and important information to consider.
FAIR CREDIT REPORTING ACT (“FCRA”)
It is fairly common for companies to screen both potential and current employees by running criminal background checks and credit checks on their applicants. The Fair Credit Reporting Act (“FCRA”) 15 U.S.C. 15 U.S.C. § 1681 et seq. is a federal law that defines the rights and duties involved in this process and governs the use of “consumer reports.” Background checks bear on a consumer’s creditworthiness and are subject to the act. Any violation of the law entitles the applicant or employee to between $100.00 and $1,000.00. When an employer wants to run a background check on an applicant it
1. Provide a “standalone” notice to the employee that a check is going to be run. The ONLY thing this piece of paper can do is disclose the fact that a report is going to be obtained and provide a space for the applicant to sign. Any other language is strictly forbidden.
2. Even if the employer provides a good initial notice, it still has more to do. BEFORE the company can actually decide to not hire the applicant, it MUST provide a “pre-adverse action notice” that gives the applicant or employee the opportunity to explain or contest the report directly with the employer. Simply telling the applicant to take any dispute about the report to the consumer reporting agency is not enough. Five (5) business days is generally sufficient time for this pre-adverse action letter. This pre-adverse action notice must also include a copy of the report AND a summary of the applicant’s rights under the FCRA.
3. If the proper notice is sent, and at least five (5) business days have passed, the company still must provide a final notice saying the person is not being hired. This notice must contain additional disclosures about the applicant’s ability to get a
free copy of his or her report and to dispute negative items with the credit bureau /reporting agency within 60 days.
Employers who rely on third party consumer reporting agencies should have an attorney review their notices and disclosures. Domino’s Pizza, Closet Maid Corp., Michaels, and Aaron’s are just a few of the several major corporations to recently find themselves facing putative class actions for these violations. Form employment applications may be inexpensive, but you get what you pay for. Many are chalk-full of errors that could land employers of all sizes in hot water.
Likewise, applicants who have had trouble getting hired because of their background checks should keep a copy of their application documents and call a lawyer to learn more about their rights.
As always, if you have any further questions regarding the above, or require any other type of legal assistance, please do not hesitate to contact us at any time for an absolutely free and completely confidential consultation.