Employers conducting background checks of applicants or employees must update the Summary of Fair Credit Reporting Act Rights. The new notice is available at https://www.consumerfinance.gov/about-us/newsroom/bureau-consumer-financial-protection-issues-updated-fcra-model-disclosures/. The update to the form is primarily related to information about security freezes. This change is of little importance to employers, but it is important to update the notice given to applicants and employees in order to be in compliance with the law. If you use a third-party vendor for background checks, you should ensure it is using the updated notice.
If you conduct background checks but are not familiar with the Fair Credit Reporting Act (“FCRA”), it is crucial to get up to speed. Seemingly minor technical violations have led to major litigation for employers.
FCRA is a federal law that applies in various contexts. With respect to employers, FCRA applies to those using “consumer reports,” such as credit checks and background checks. Before requesting such reports, FCRA requires employers to obtain written consent from the applicant or employee and to distribute the Summary of Fair Credit Reporting Act rights. The written consent must be given on a standalone form.
If the employer chooses to take an adverse action based on information contained in the consumer report, such as a refusing to hire an applicant based on a criminal conviction, the employer must provide a copy of the report along with a copy of the Summary of Fair Credit Reporting Act rights. This must be done before taking an adverse action.
After taking an adverse action, the employer must provide notice of the adverse action including:
- the name, address, and phone number of the consumer reporting company that supplied the report;
- a statement that the company that supplied the report did not make the decision to take the unfavorable action and can’t give specific reasons for it; and
- a notice of the employee’s or applicant’s right to dispute the accuracy or completeness of any information the consumer reporting company furnished, and to get an additional free report from the company if requested within 60 days.
Employers are also required to securely dispose of reports when they are no longer being used, such as by burning paper files or erasing electronic files so that the information cannot be read or reconstructed.
As a reminder, Connecticut law limits criminal inquiries on employment applications. Read more about this law here. Connecticut law also requires background checks for school employers and their contractors. Read more about this law here.
Our team of labor and employment attorneys can assist employers in complying with the complicated landscape of background check laws and ensuring compliance with all applicable labor and employment laws.