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IBA: New FCRA Background Check Requirements Effective Jan. 1, 2013

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halbert-jeffrey-mug Halbert

By Jeffrey B. Halbert, Stewart & Irwin PC

Employers utilizing consumer reporting agencies for purposes of conducting employee background checks are required to comply with specific requirements of the Fair Credit Reporting Act (“FCRA”). The FCRA provides very broad definitions for what constitutes a “consumer reporting agency,” “consumer report,” and “investigative consumer report.” In order to comply with the FCRA, employers obtaining consumer reports from consumer reporting agencies, must: (i) prior to receipt of a consumer report, make a “clear and conspicuous” written disclosure to the consumer (i.e., prospective employee), in a document that consists “solely” of the disclosure, that a consumer report may be obtained for “employment purposes”; and (ii) the applicant must provide advance written consent for the employer to obtain a consumer report for “employment purposes.”1

The FCRA also imposes additional disclosure requirements on employers obtaining investigative consumer reports (i.e., consumer reports based on personal interviews conducted by a consumer reporting agency, such as in-depth reference checks). The employer must disclose to the applicant or employee that an investigative consumer report may be obtained from a consumer reporting agency. The disclosure must include a statement informing the applicant or employee of his or her right to request additional disclosures of the “nature and scope” of the investigation, as well as the FCRA Summary of Rights. The employer must also certify to the consumer reporting agency that it has a “permissible purpose” for requesting a report and that it (i) has provided the required disclosures to the applicant or employee; (ii) has obtained written authorization from the applicant or employee; (iii) will not use the information contained in the report in violation of any federal or state equal opportunity law of regulation; and (iv) will provide the applicant or employee with a copy of the report and FCRA Summary of Rights in the event that an “adverse action” is taken on the basis of information contained in the report.

If an employer takes an adverse action against the applicant or employee, in whole or in part, based on information contained in the report, the employer must follow the two-step notification process. First, before the employer implements the adverse action against the applicant or employee, it must provide a “pre-adverse action” notice to the individual, which must include a copy of the report and the FCRA Summary of Rights. If after waiting the required time, the employer is prepared to take the adverse action against the applicant or employee, it must then provide an “adverse action” notice to the individual, which must include specific information contained within the statute, including contact information for the applicable consumer reporting agency.

The FCRA allows an applicant or employee to pursue a private cause of action against an employer for “negligently” or “willfully” failing to comply with any of the requirements of the Act relating to the individual. The statute of limitations for FCRA violations require that an action be brought by the earlier of (i) two years after the date of discovery by the plaintiff of the violation; or (ii) five years after the date on which the violation that is the basis of the alleged liability occurred. Available damages vary depending on whether the alleged violation is negligent or willful. An employer who negligently fails to comply with any requirement of the FCRA relating to the individual is liable for (i) actual damages sustained by the individual; and (ii) reasonable attorneys’ fees and costs. Employers who willfully violate the statute are subject to (i) actual damages or statutory damages ranging between $100 and $1,000; (ii) punitive damages; and (iii) attorneys’ fees and costs.

Responsibility for enforcement of the FCRA, for the most part, has been transferred from the Federal Trade Commission (FTC) to the newly created Consumer Financial Protection Bureau (CFPB) as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act. As such, CFPB now possesses primary rulemaking responsibility for the FCRA and recently issued regulations requiring updates to FCRA notices being utilized for background check purposes. Prior to Jan. 1, 2013, employers must substitute the new FCRA Summary of Rights for those currently being utilized when (i) they enclose the form with the “pre-adverse action” notice; and (ii) provide the form with required disclosures for investigative consumer reports. Specifically, the CFPB has modified the FCRA Summary of Rights, Notice to Users of Consumer Reports of their Obligations under the FCRA and Notice to Furnishers of Information of their Obligations under the FCRA to make clear that the CFPB is the agency from which consumers may obtain information about their rights under the FCRA. The new forms can be found at Appendices K, M, and N to 12 C.F.R. Part 1022 and obtained online at www.ecfr.gov or www.consumerfinance.gov.

Given the intensified focus on background checks by other agencies such as the Equal Employment Opportunity Commission (EEOC) and newly issued state laws in Indiana and other states, it is incumbent upon employers to sufficiently assess their current credit and criminal record screening policies and procedures in order to ensure compliance with applicable laws.•

1Additional, but less stringent, rules apply in the context of investigations into employee misconduct.
 

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  1. Call it unauthorized law if you must, a regulatory wrong, but it was fraud and theft well beyond that, a seeming crime! "In three specific cases, the hearing officer found that Westerfield did little to no work for her clients but only issued a partial refund or no refund at all." That is theft by deception, folks. "In its decision to suspend Westerfield, the Supreme Court noted that she already had a long disciplinary history dating back to 1996 and had previously been suspended in 2004 and indefinitely suspended in 2005. She was reinstated in 2009 after finally giving the commission a response to the grievance for which she was suspended in 2004." WOW -- was the Indiana Supreme Court complicit in her fraud? Talk about being on notice of a real bad actor .... "Further, the justices noted that during her testimony, Westerfield was “disingenuous and evasive” about her relationship with Tope and attempted to distance herself from him. They also wrote that other aggravating factors existed in Westerfield’s case, such as her lack of remorse." WOW, and yet she only got 18 months on the bench, and if she shows up and cries for them in a year and a half, and pays money to JLAP for group therapy ... back in to ride roughshod over hapless clients (or are they "marks") once again! Aint Hoosier lawyering a great money making adventure!!! Just live for the bucks, even if filthy lucre, and come out a-ok. ME on the other hand??? Lifetime banishment for blowing the whistle on unconstitutional governance. Yes, had I ripped off clients or had ANY disciplinary history for doing that I would have fared better, most likely, as that it would have revealed me motivated by Mammon and not Faith. Check it out if you doubt my reading of this, compare and contrast the above 18 months with my lifetime banishment from court, see appendix for Bar Examiners report which the ISC adopted without substantive review: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS

  2. Wow, over a quarter million dollars? That is a a lot of commissary money! Over what time frame? Years I would guess. Anyone ever try to blow the whistle? Probably not, since most Hoosiers who take notice of such things realize that Hoosier whistleblowers are almost always pilloried. If someone did blow the whistle, they were likely fired. The persecution of whistleblowers is a sure sign of far too much government corruption. Details of my own personal experience at the top of Hoosier governance available upon request ... maybe a "fake news" media outlet will have the courage to tell the stories of Hoosier whistleblowers that the "real" Hoosier media (cough) will not deign to touch. (They are part of the problem.)

  3. So if I am reading it right, only if and when African American college students agree to receive checks labeling them as "Negroes" do they receive aid from the UNCF or the Quaker's Educational Fund? In other words, to borrow from the Indiana Appellate Court, "the [nonprofit] supposed to be [their] advocate, refers to [students] in a racially offensive manner. While there is no evidence that [the nonprofits] intended harm to [African American students], the harm was nonetheless inflicted. [Black students are] presented to [academia and future employers] in a racially offensive manner. For these reasons, [such] performance [is] deficient and also prejudice[ial]." Maybe even DEPLORABLE???

  4. I'm the poor soul who spent over 10 years in prison with many many other prisoners trying to kill me for being charged with a sex offense THAT I DID NOT COMMIT i was in jail for a battery charge for helping a friend leave a boyfriend who beat her I've been saying for over 28 years that i did not and would never hurt a child like that mine or anybody's child but NOBODY wants to believe that i might not be guilty of this horrible crime or think that when i say that ALL the paperwork concerning my conviction has strangely DISAPPEARED or even when the long beach judge re-sentenced me over 14 months on a already filed plea bargain out of another districts court then had it filed under a fake name so i could not find while trying to fight my conviction on appeal in a nut shell people are ALWAYS quick to believe the worst about some one well I DID NOT HURT ANY CHILD EVER IN MY LIFE AND HAVE SAID THIS FOR ALMOST 30 YEARS please if anybody can me get some kind of justice it would be greatly appreciated respectfully written wrongly accused Brian Valenti

  5. A high ranking Indiana supreme Court operative caught red handed leading a group using the uber offensive N word! She must denounce or be denounced! (Or not since she is an insider ... rules do not apply to them). Evidence here: http://m.indianacompanies.us/friends-educational-fund-for-negroes.364110.company.v2#top_info

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