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Background Checks for Employment and The Fair Credit Reporting Act

On Behalf of | Jan 15, 2012 | Consumer Protection

A background check for employment that results in a termination
or failure to gain employment can lead to violations of the Fair Credit
Reporting Act
.  If part of the interview process requires
a background check, or if your continued employment with a company
depends upon a background check, you have rights under the Fair
Credit Reporting Act.  Most background reports used by
businesses are considered consumer reports or credit reports under
the Fair Credit Reporting Act. 

Adverse Action Notice:

The FCRA requires that before taking any adverse action against
a consumer, such as not hiring the consumer or termination if the
background check is completed after hiring, the employer must
provide certain information to the consumer.  This notice is
often referred to as an “adverse action notice”.  An adverse
action notice advises a person that a decision was made regarding
his or her employment (or credit or insurance) based upon
information contained within a credit or consumer report.  A
proper notice advises the consumer of the name of the consumer
reporting agency that provided the report, its contact information,
and a statement that provides information on how to obtain a copy
of that report.  The purpose is to provide a consumer the
right to see the information and correct it in the event the report
is inaccurate or incomplete.  That can happen, for example, if
a consumer is the victim of identity theft and a crime is committed
in his or her name, or if a court record is inaccurate.  The
consumer then has an opportunity to set the record straight. 
We have seen circumstances wherein a consumer report on an
individual stated that the person was previously convicted of a
felony.  However, the crime committed was a simple
misdemeanor, and the person’s penalty was minor.  Having a
felony record obviously paints a very different picture of the

Disclosure of the Background Check and Releases of

The FCRA also regulates disclosure of information to a consumer
that a background check will be performed and the need for a
written authorization, including a specific requirement that the
disclosure be “in a document that consists solely of the
disclosure.”   Many times the disclosure will contain a
release of liability that purported to release the employer as well
as any provider of information from any liability, claims, or
causes of action related to the information obtained.  Any
disclosure that contains a release of liability  must be a
“standalone” document.   This means as the word states,
the document must be a separate document and apart from all other
information provided at that time of the application.  In
fact, two previous opinions letters from the staff of the FTC have
addressed release language and the standalone document issue:
 • In one letter, the FTC indicates the form should not
consist “solely” of the disclosure. (See the FTC Hauxwell
 • Another letter indicates that the FCRA requires a form
that is not “encumbered by any other information… (in order) to
prevent consumer from being distracted by other information
side-by-side with the disclosure.”   (See the FTC Leathers letter)
The FCRA allows any potential employer to gain access to a credit
report of an applicant, so refusing to sign such an authorization
would not be in an applicants best interests.  Once that
report is viewed and if it contains false information that prevents
a person from getting employment, the FCRA protects consumers.
SmithMarco, P.C., has over 30 years of combined experience
practicing law protecting the rights of consumers around the
country and handles Fair Credit Reporting Act cases. If you feel
that you’re rights have been violated, please contact us for a free case review.