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The Legality of Background Checks

On Behalf of | Dec 22, 2021 | Consumer Protection

You apply for a job and go in for the interview.  Everything goes well.  The employer is eager to have you on board.  You are hired, pending routine background check.  Then a few days later, you receive a letter from that employer that tells you that they cannot hire you because of the results of the background check.  Naturally, this can be startling, especially if you have no reason to fail a background check.  Was this legal?

When are background checks legal?

A background report is a “consumer report” under the Fair Credit Reporting Act.  So, the FCRA actually applies to background checks.  If one is seeking credit, insurance, or employment, a background check can be performed.  Naturally though, full background reports are typically only done in employment settings, while credit and insurance checks look more at credit and insurance history.  When it comes to obtaining a report for employment purposes, there are a few added rules.

Employer must have express written consent

Prior to obtaining a background report for employment, an employer must obtain your written permission.  They must have you sign an authorization that plainly states that they will be running a report on you, and you authorize it.   Furthermore, the written authorization cannot be buried somewhere in the paperwork.  It must be a stand alone document.  This is different from a credit transaction, where an actual signed authorization form is not necessary.

Employer must give you pre-adverse action notice

If an employer is going to deny a job because of a background report, it must give written notice before they actually deny employment.  This is very different from a credit transaction, where a creditor can outright deny an application upon review.  An employer finding information that may cost the person the job must provide that person written notice that the background report may be used to deny employment and must show that particular item or items on the report that are the cause for concern.  That way, the applicant has an opportunity to correct the information, explain anything that must be explained, and save their job.

Employer must give written adverse action notice

Just like a creditor denying credit, an employer must give written notice of denial.  Included in that notice must be an explanation of the reasons for the denial and what rights the consumer has.  These rights include the right to a free report from the company that provided the report in the background check, and the right to dispute inaccurate information on the report.

If you are losing employment opportunities because of false information on a background report, contact SmithMarco, P.C. for a free case review.

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