Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) has certain requirements for employers regarding consumer reports and investigative reports of their employees and job applicants.

Consumer Reports
Employment background checks are a type of consumer report and may include credit history and criminal records.

Before an employer gets a consumer report, they must comply with the following requirements:

  • Tell the applicant or employee that the employer might use information in their consumer report for decisions related to their employment. This notice must be in writing and in a stand-alone document.
  • Get written permission from the applicant or employee. This can be part of the document that notifies the person that the employer will get a consumer report. If the employer wants the authorization to last throughout the person’s employment, the document must say so clearly and conspicuously.
  • Certify compliance with FCRA requirements to the company running the check. The certification must include all the following:
    • That the employer notified the applicant or employee and got their permission to get a consumer report.
    • That the employer complied with all the FCRA requirements.
    • That the employer will not discriminate against the applicant or employee or otherwise misuse the information, as provided by any applicable federal or state equal opportunity laws or regulations.

Before taking an adverse action based on information in a consumer report, employers must provide the following:

  • a notice that includes a copy of the consumer report they relied on to make their decision; and
  • a copy of A Summary of Your Rights Under the Fair Credit Reporting Act, which the company that gave the employer the report should have provided.

After taking an adverse action, employers must do the following:

  • Inform the employee of the adverse action either orally or in writing.
  • Provide the name, address, and phone number of the consumer reporting company that supplied the report.
  • Provide a statement that the company that supplied the report did not make the decision to take the unfavorable action and cannot give specific reasons for it.
  • Inform the employee of their right to dispute any inaccurate or incomplete information and get an additional free report from the company if the employee asks for it within 60 days.

After an employer has used a consumer report, they must securely dispose of the report and any information gathered from it. Securely disposing of the information means that it cannot be read or reconstructed.

Investigative Reports
Investigative reports are reports based on personal interviews regarding a person’s character, general reputation, personal characteristics, or lifestyle. An employer who requests an investigative report must provide written notice to the employee that they have requested an investigative report within three days of doing so.

The employer must also give the employee a statement that they have the right to request additional disclosures and a summary of the scope and substance of the report. Within five days of an employee’s request, the employer must inform the employee in writing of the complete nature and scope of the investigation requested.

The employer must also certify to the consumer reporting agency that it has complied with these requirements regarding investigative reports.