New Requirement for Employment Background Checks

Employers using background checks for applicants and for current employees must comply with the Fair Credit Reporting Act (“FCRA”).   The Federal Trade Commission (“FTC”), which administers the FCRA has just published a  new Notice of Rights, which must be given to all applicants and employees whenever an employer intends to take adverse action, such as not hiring or promoting, because of the information contained in the background check report that they have received.    This new Notice should be given, along with a copy of the background report and a “pre-adverse action letter” to the applicant or employee prior to the employer taking any action.  The employee or applicant must be given a reasonable amount of time  (at least 5 full business days) to demonstrate to the employer that the information in the report is not correct and/or applies to someone else.  If there is no correcting information tendered, or the employer believes that the original information is correct, then they issue an “adverse action letter”, along with another copy of this new FCRA Notice and information about where the applicant or employee can get a free copy of the background report.  The FTC publishes an excellent pamphlet titled  “Using Consumer Reports: What Employers Need to Know”, which you can obtain by clicking on this link.