As we enter a new year it is important to look at the crucial elements that keep employers in compliance with the law, specifically the Fair Credit Reporting Act (FCRA). We’ve comprised a list of the Top 5 Things you should be doing in 2014 to be sure you’re in line:
1. USERS MUST HAVE A PERMISSIBLE PURPOSE
To protect consumers’ privacy, all users/employers must have a permissible purpose under the FCRA to obtain a consumer report. As it relates to employment background screening, a user can request a report for employment purposes, including hiring and promotion decisions, where the consumer has given written permission (section 604(a)(3)(B) and 604(b)).
2. DISCLOSURE AND AUTHORIZATION
So simple, yet so crucial – Before an employer can obtain a consumer report for employment purposes, the FCRA requires the employer to (1) provide the applicant with a clear and conspicuous disclosure in a document that consists solely of the disclosure and to (2) obtain written authorization from the consumer.
3. ADVERSE ACTION PROCESS
The law requires that employers take several steps before taking adverse action based in whole or in part on a consumer report. Not only does the denial of employment fall under the FCRA definition of “adverse action”, but any other decision for employment purposes that adversely affects any current or prospective employee will constitute an adverse action.
There are two parts to the Adverse Action Process:
a. Pre-Adverse Notification and Documents: BEFORE an adverse action is taken, you must provide the applicant:
• a Pre-Adverse Action letter,
• a copy of the consumer report, and
• a description in writing of their rights under the FCRA as prescribed by the FTC.
The pre-adverse action process allows the applicant the chance to dispute the negative information in the report. The employer should allow a reasonable amount of time for the applicant to respond to this pre-adverse notification before final determination is made or adverse action is taken.
See the FCRA Summary of Rights here.
b. Adverse Action Notification
If you decide to take any adverse action (such as terminating or not employing/promiting the applicant), based in whole or in part, on the information revealed in the consumer report, you must provide the applicant with the following in writing, orally or electronically (written documentation is highly recommended).
• a notice to the applicant of the adverse action;
• the names, address and telephone number of the consumer reporting agency and a statement that “the
consumer reporting agency did not make the decision to take the adverse action and is unable to provide the
applicant the specific reasons why the adverse action was taken”; and,
• a notice of his/her right to obtain within sixty (60) days, a free copy of the consumer report from the consumer
reporting agency and to dispute with the CRA the accuracy or completeness of any information in a
consumer report furnished by the CRA.
4. CONSUMER DISPOSAL PROCESS
You must properly dispose of the information. Section 628 of the FCRA requires that all users of consumer report information have in place procedures to properly dispose of records containing this information. Any business or individual who uses a consumer report for a business purpose is subject to the requirements of the Disposal Rule, a part of the Fair and Accurate Credit Transactions Act of 2003 (FACTA), which calls for the proper disposal of information in consumer reports and records to protect against “unauthorized access to or use of the information.” The Rule requires disposal practices that are reasonable and appropriate to prevent the unauthorized access to – or use of – information in a consumer report.
Reasonable measures for disposing of consumer report information could include establishing and complying with policies to: burn, pulverize, or shred papers containing consumer report information so that the information cannot be read or reconstructed; destroy or erase electronic files or media containing consumer report information so that the information cannot be read or reconstructed; or conduct due diligence and hire a document destructions contractor to dispose of material specifically identified as consumer report information consistent with the Rule.
5. COMPLY WITH STATE LAWS
Many states have their own versions of the FCRA. Some apply strictly to credit reports while others specify job “relatedness” for the use of criminal reports or limit the time that convictions can be reported. It is important that you comply with any specific state laws relating to background screening. Although there are several states with specific laws, California’s Consumer Credit Reporting Agencies Act, the Massachusetts CORI Reform bill and New York Correction Law Article 23-A are some of the more complex state laws. We would encourage you to have your background screening policies and procedures reviewed by your legal counsel to ensure that you are not only in compliance with the federal FCRA but also with any state requirements.
As a NAPBS accredited consumer reporting agency, ESS is committed to consumer protection, and FCRA and legal compliance. Contact us toll free at 1-866-859-0143.