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Employment Background Checks – No Avoiding the Law

On Behalf of | Apr 13, 2017 | Consumer Protection

Earlier this year, the U.S. Court of Appeals was forced to review a question that had never before been considered by an appellate court relating to the Fair Credit Reporting Act (“FCRA”) and its rules regarding employment background checks. Under the law, employers looking to use an applicant’s credit report to aid in a hiring decision must follow the rules laid out under the Fair Credit Reporting Act.

Employment Background Checks and the FCRA

The FCRA states that to comply with the law, employers looking to conduct a background check must follow a detailed process. First, the employer must receive express permission from the applicant in order to conduct a background check.  The permission must be on a document and it must not contain any other information but the permission.

Next, if there appears to be damaging information about the consumer, the employer must notify the applicant that it intends to take adverse action against the applicant based on the information contained in the report, AND the employer must provide him or her with a copy of the report, the name of the company from which the report was obtained, and with a copy of the FCRA explaining the applicant’s right to dispute any inaccurate information contained in the report.  If the employer ultimately decides to reject the applicant because, in part, of the report the employer must provide written notice explaining and provide information about the reporting agency used.

Syed v. M-I, LLC

In Syed v. M-I, LLC, the U.S. Court of Appeals for the Ninth Circuit held that an employer is in violation of the FCRA when it obtains an applicant’s consumer report after including a liability waiver in the same document as the statutorily mandated disclosure.  During the job application process, the plaintiff was presented a form titled “Pre-employment Disclosure Release” that did not consist solely of the disclosure as required by the FCRA.  The form contained a provision that released the employer and its agent for any violations of the FCRA.  As stated above, the FCRA does not permit an employer to include any other information or provisions on the form that authorizes the employer to conduct a background check.

The Court stated that the statute is clear that a request to access a consumer report must be in writing and contain solely information related to the request for a consumer disclosure.  This case can serve as a warning to employers conducting background checks who are looking for loopholes around the law.  Asking an applicant to waive liability should not exonerate an employer from following the law that is in place to protect employees.

If you believe your rights have been violated under the FCRA and would like the advice or assistance of counsel, contact SmithMarco P.C. for a completely free case review.