Fair Credit Report Act
Any employer that chooses to use a consumer report for employment decisions is required to comply with the Fair Credit Reporting Act, 15 U.S.C. 1681, which is known as the FCRA. Before and after obtaining a consumer report and taking action based upon information provided in a consumer report, the FCRA mandates that an employer meet each of the following requirements:
- Advise the applicant or employee that the employer might use information which is contained within the consumer report for decisions pertaining to the possible employment relationship. There are strict requirements for the notice including that the notice be in writing in a separate document. Placing notice within an employment application is insufficient.
- The employer is required to obtaining written authorization before obtaining the credit report. When ordering the report from the credit report company the employer must provide certification that the employer will not discriminate against the applicant or employee and will not use the information for any purpose which is prohibited by state or federal regulations or laws.
- Before an employer takes action based upon information obtained within a consumer report, such as denying employment, terminating an employee or denying a promotion, the employer must provide the applicant or employer with a written notice, including a copy of the consumer report received the employer which the employer used to make an adverse decision, as well as a summary of the applicant or employee rights under the Fair Credit Reporting Act.
- Should an employer take action as a consequence of information received from a consumer report, the employer must provide the applicant or employee with a notice which advises the employee or applicant about Fair Credit Reporting Act rights, including the right to review information which was reported and the opportunity to correct information which was not accurately reported. The notice must include the identity of the consumer reporting company that supplied the report, including contact information such as a telephone number and business address; confirmation that the consumer company that provided the report did not make the adverse decision; a notice describing how to formally dispute inaccurate information within the report; and the right to receive an additional report at no charge within 60 days.
A civil action can be brought against an employer for failure to comply with the requirements of the Fair Credit Reporting Act. An applicant or employee can recover damages which include an award of actual damages sustained, as well as statutory damages ($100-$1,000 per violation), punitive damages and reasonable attorneys’ fees and costs.