Denied a Job Because of the Background Check? Using Background Checks When Deciding Who to Hire? Co

It’s fairly common for companies to screen employees by running criminal background checks and credit checks on their applicants (and, somewhat less frequently, on their current employees). The Fair Credit Reporting Act (“FCRA”) 15 U.S.C. 15 U.S.C. § 1681 et seq. defines the rights and duties in this space. The FCRA 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 and $1,000.

When an employer wants to run a background check on an applicant it must:

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 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 isn’t enough. Five 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 business days has passed, the company

must provide a final notice saying the person isn’t 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 give us a call so that we can review their notices and disclosures. Domino 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’ve had trouble getting hired because of their background checks should keep a copy of their application documents and call us to learn more about their rights.


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