Fair Credit Reporting Act Has Broad Implications For Employers
The Fair Credit Reporting Act (FCRA) allows employers to obtain and use a consumer (credit) report or investigative credit report for the employment purpose of evaluating an individual for employment, promotion, reassignment or retention as an employee. However, these reports cannot be used for any other employment purpose.
The FCRA requires employers (regardless of size) that use consumer reports and consumer investigative reports to follow a number of procedures, including making specified disclosures, obtaining written authorization and providing certain notices and certifications. The procedures must be followed very carefully, as violations of the law subject the company to significant liability.
A “consumer report” is defined as any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.
An “investigative consumer report” is a consumer report in which information on a consumer’s character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates.
Each time a credit report or investigative consumer report is obtained, certain detailed procedures must be followed.
If your company is using these types of reports to evaluate employees or potential employees, you should seek legal advice to ensure compliance with the Act.