In two technical assistance documents issued earlier this year, the EEOC and the Federal Trade Commission (FTC) joined together to remind employers and employees of their obligations and rights when employers conduct background checks of employees. Such background checks must comply with the provisions of the Fair Credit Reporting Act, which is enforced by the FTC.
Pre-Report Obligations. Prior to obtaining background information, such as a credit or criminal background report, the employer must act as follows:
1. In writing, and in a stand-alone format, the employer must advise the applicant that the company may use the information for decisions about their employment. That notice cannot be in an employment application. Additional information may be communicated to the applicant at that time only if it does not confuse the notice.
2. If the employer seeks a report based upon interviews with acquaintances of the applicant concerning character, lifestyle, personal characteristics or reputation, the company has to tell the applicant of the right to obtain a description of the nature and scope of the investigation.
3. The employer must obtain the employee’s written permission to do the background check. That permission can be obtained in the same document used to notify the applicant that the employer will obtain a report. If that authorization is to extend to additional background reports during the employee’s employment, the authorization must clearly and conspicuously make that statement.
4. The employer must, obviously, certify to the company from which it is obtaining the report that it had notified the employee and received their permission, that they complied with all the FCRA requirements, and that they will not discriminate against the applicant or otherwise misuse the information.
Adverse Action. When an employer takes an adverse employment action against an applicant or an employee based on background information, it must act as follows:
1. Before taking an adverse employment action the employer must give the applicant or employee a notice that includes a copy of the consumer report the employer relied on and, a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act.” That form has been updated.
2. After the employer takes an adverse employment action it must inform the employee (orally, although a better practice is in writing or electronically) that they were rejected because of the information in the report, provide the name, address and phone number of the company that provided the report, confirm that the company selling the report did not make the hiring decision and cannot provide the reasons for which the decision was made, and inform the employee that they have a right to dispute the accuracy or the completeness of the report and to get an additional free report from the reporting company within 60 days.
The new information also provides that the employer may dispose of background reports when it is done using them, but only securely by, for example, burning or shredding them.
The importance of complying with these requirements is that there have been a number of class actions by employees or applicants against employers for violating the provisions of the FCRA. Employers who use background reports with regularity should reexamine their protocol for providing information to the applicant or the employee to avoid becoming the target of yet another class action.