Employers who conduct employment background checks, also known as consumer reports and/or investigative consumer reports, as part of the employment process, which includes hiring, promotion, and retention, must comply with Federal law requirements under section 604 of the Fair Credit Reporting Act, (FCRA).
Before rejecting a job applicant, denying a promotion or terminating an employee based in whole or in part on information obtained in a consumer report, employers are obligated under the FCRA to follow a two-step process:
• Pre-adverse action
Companies must provide to the applicant/employee the following in advance of a decision, either in writing, in person or electronically:
a) A copy of the consumer report that was obtained and relied upon to make the decision.
b) A copy of A Summary Of Your Rights Under The Fair Credit Reporting Act
c) The name, address and phone number of the background screening company that provided the screening report.
d) A letter stating the employer’s INTENT to not hire, not promote or to terminate the candidate/employee
• Adverse action
If the decision is made to proceed with an adverse action, based on information in a consumer report/investigative consumer report, the employer must advise of your intent to not hire, not promote or terminate the candidate/employee. The following must be provided either in writing, in person or electronically:
a) The name, address and phone number of the background screening company that provided the screening report.
b) A copy of the consumer report you obtained and relied upon to make your decision.
c) A copy of A Summary Of Your Rights Under The Fair Credit Reporting Act
d) A letter stating the employer has made the decision to not hire, not promote or to terminate the candidate/employee
What to do if a candidate/employee notifies the employer about a challenge to the content of the consumer report/investigative consumer report:
1. Notify the candidate/employee that the employer is immediately notifying the consumer reporting agency (CRA) of the dispute, and that the candidate/employee will receive a response from the CRA
2. Notify the CRA about the challenge and instruct the CRA to contact the candidate/employee immediately and notify the CRA to provide a response to the employer and to the candidate/employee, immediately upon completion of the CRA’s review, evaluation and conclusion regardsing the challenge
Providing candidates/employees with a speedy notification, allows the consumer reporting agency, (CRA), to respond to disputes and correct errors that may appear in the screening reports. Working closely with your pre-employment screening company, when a dispute is under investigation, will help to expedite the investigation.
For more information about additional rights, visit the Consumer Financial Protection Bureau website.
Learn more about the Consumer Reports Section 604 (b) of the FCRA document.
Compliance failure by a user of pre-employment screening reports may place that user’s company in violation of federal law and at risk for legal action at the federal level.