Payday loans

August 24, 2012

HR Fact Friday: Background Checks and the FCRA (Part 2 of 2)

Part 2 of 2 – Part 1 published 8/17/2012

FTC STEP TWO – BEFORE YOU TAKE ADVERSE ACTION

Before you reject a job application, reassign or terminate an employee, deny a promotion, or take any other adverse employment action based on information in a consumer report, you must give the applicant or employee:

  1. a notice that includes a copy of the consumer report you relied on to make your decision; and
  2. a copy of A Summary of Your Rights Under the Fair Credit Reporting Act, which the company that gave you the report should have given to you.  This is found at: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre35.pdf

Giving the person the notice in advance gives the person the opportunity to review the report and tell you if it is correct.

FTC STEP THREE- AFTER YOU TAKE ADVERSE ACTION

If you take an adverse action based on information in a consumer report, you must give the applicant or employee a notice of that fact – orally, in writing, or electronically. An adverse action notice tells people about their rights to see information being reported about them and to correct inaccurate information.  The notice must include:

  1. the name, address, and phone number of the consumer reporting company that supplied the report;
  2. a statement that the company that supplied the report did not make the decision to take the unfavorable action and can’t give specific reasons for it; and
  3. a notice of the person’s right to dispute the accuracy or completeness of any information the consumer reporting company furnished, and to get an additional free report from the company if the person asks for it within 60 days.

NEW CREDIT SCORES RULE NOW IN EFFECT

The financial reform package passed by Congress last year contains an amendment to the Fair Credit Reporting Act that will impact employers and that took effect in July of 2011.  Specifically, the new law includes a provision regarding the adverse use of credit scores.  The new provision states that anyone who uses a third party provided consumer report including a credit score to deny employment must disclose: (1) that a credit score was used; (2) the score; (3) up to four key adverse factors in the score and the agency that provided it so the applicant can correct any errors.  As with other adverse uses of information covered by the FCRA, the employer must provide this information along with a written description of the applicant’s rights under the FCRA, prior to taking adverse action (such as denying employment).

DOCUMENT AND REMEMBER THE EEOC’S RECENT GUIDANCE TOO

One more point.  I also recommend a brief memo to the file explaining why an applicant has been rejected because of his/her criminal convictions or credit history.  This should include a specific explanation on how the conviction or credit problem disqualifies the person for the job…example… “we did not hire this applicant to be our van driver because within the recent past he has 2 DUI convictions, 1 reckless driving conviction and 3 speeding tickets.”  This will give you the contemporaneous documentation you need in case someone alleges you are using credit or criminal history as a ruse to discriminate.  This particular point is one that the EEOC has empathized recently.  For example, see the EEOC Guidance-Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 (issued on 4/25/12), found at: http://www.eeoc.gov/laws/guidance/arrest_conviction.cfm.

Happy Background Checking!

Thanks to Jones Waldo Employment Attorney Michael Patrick O’Brien for contributing to this post (www.joneswaldo.com).

Share

No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.