As I have discussed in several posts throughout the year, new amendments to the Fair Credit Reporting Act, (“FCRA”) require employers and credit reporting agencies to provide additional information to potential and current employees prior to accessing a credit file for employment purposes. Employers are also required to provide additional disclosures after taking adverse action against the individual based on the information contained in the report.
The FCRA is the federal law that imposes requirements on employers who use credit reports when determining whether to hire or continue employment. With the new amendments to the law, employers must embark on a four step process using federally mandated forms. These four steps include, certification to the consumer reporting agency, notice and authorization from the applicant, pre-adverse action protocol and adverse action protocol.
Certification to the Consumer Reporting
Agency A credit reporting agency may furnish a consumer report for employment purposes if the employer certifies that the potential or current employee granted written authorization for the employer to do so. The employer must state that it will use the information for employment purposes only and it will comply with the adverse action conditions should adverse action be necessary based on the information contained in the report.
Notice and Authorization from the Applicant The next step after certification requires the employer to notify the potential or existing employee that it plans to access the employers credit file and use the information contained in the report as a basis in its decision to hire or continue current employment. The employee must provide the employer with written notification that it agrees to allow the employer to access his or her credit file for this purpose.
Pre-Adverse Action Protocol If an employer decides it may use the information contained in the consumer report to take “adverse action”, an action that denies an individual credit, employment, insurance or other benefit, it must provide the employee, whether potential or current, with a copy of the report as well as a copy of ” A Summary of Your Rights under the FCRA“.
Adverse Action Protocol If based on the information contained in the consumer report, the employer decides to take adverse action against the employee it must inform the employee, whether orally or in writing, of its decision not to hire or continue employment and of the statutorily required information. This information includes the name, address and phone number of the credit reporting agency which supplied the report; a statement that the credit reporting agency that supplied the information did not make the decision to take adverse action; and a notice of the employee’s right to dispute the accuracy or completeness of any information in the report and to get an additional free report from the company that supplied the credit or other background information if requested within 60 days.
If you are having difficulty with information contained in your credit report or feel you have not been provided with proper notice of your rights during the employment process, contact SmithMarco P.C. for a free case review.