Step 1: Before You Get A Consumer Report
Before you can order a consumer report for employment purposes, you must notify the individual in writing - in a document consisting solely of this notice - that you are using the report. You must also get the person's written authorization before you ask a CRA for the report. (Special procedures apply to the trucking industry). If you want the authorization to allow you to get consumer reports throughout the person's employment, make sure you say so clearly and conspicuously. It's a good idea to review applicable laws of your state related to consumer reports. Some states restrict the use of consumer reports - usually credit report - for employment purposes.
Step 2: Before You Take Adverse Action
If you rely on a consumer report for an "adverse action" - denying a job application, reassigning or terminating an employee, or denying a promotion - be aware that:
Before you take the adverse action, you must give the individual a pre-adverse action disclosure that includes a copy of the individual's consumer report and a copy of "A Summary of Your Rights Under the Fair Credit Reporting Act" - a document prescribed by the Consumer Financial Protection Bureau (CFPB). The CRA that furnishes the individual's report will give you the summary of consumer rights.
Once you have completed the ‘pre adverse action’ process outlined in the Fair Credit Reporting Act, the Equal Employment Opportunity Commission (EEOC) also requires that you conduct an individualized assessment prior to taking adverse action. An overview of this assessment procedure, along with the correlating requirements of a written policy on the use of criminal records in employment decisions, can be found on IntelliCorp’s EEOC webpage.
Step 3: After You've Taken Adverse Action
After you've taken an adverse action, you must give the individual notice - orally, in writing, or electronically - that you have taken the adverse action. The notice must include:
- the name, address, and phone number of the CRA that supplied the report
- a statement that the CRA that supplied the report did not make the decision to take the adverse action and cannot give specific reasons for it
- a notice of the individual's right to dispute the accuracy or completeness of any information the agency furnished and his or her right to an additional free consumer report from the agency upon request within 60 days
What's your responsibility?
In any case where information in a consumer report is a factor in your decision - even if the report information is not a major consideration - you must follow the procedures mandated by the FCRA. In this case, you must provide the applicant a pre-adverse action disclosure before you reject his or her application. When you formally reject the applicant, you must provide an adverse action notice.
The applicants for a sensitive financial position have authorized you to obtain credit reports. You reject one applicant because his or her credit report shows a debt load that may be too high for the proposed salary, even though the report shows a good repayment history. You turn down another because the credit report shows only one credit account and you want someone who has shown more financial responsibility.
Are you obliged to provide any notices to these applicants?
Both applicants are entitled to a pre-adverse action disclosure and an adverse action notice. If any information in the credit report influences an adverse decision, the applicant is entitled to the notices - even when the information isn't negative.
The applicant has the right to receive a copy of their background check from IntelliCorp Records Inc.
There are legal consequences for employers who fail to get an applicant's permission before requesting a consumer report or fail to provide pre-adverse action disclosures and adverse action notices to unsuccessful job applicants. The FCRA allows individuals to sue employers for damages in federal court. A person who successfully sues is entitled to recover court costs and reasonable legal fees. The law also allows individuals to seek punitive damages for deliberate violations. In addition, the Federal Trade Commission, other federal agencies, and the states may sue employers for noncompliance and obtain civil penalties.
The Fair Credit Reporting Act imposes, among other obligations, the requirement of using consumer reports accessed for employment purpose in compliance with federal and state Equal Employment Opportunity (EEO) regulations. Information relating to employment issues and the EEOC can be found on the EEOC’s Employers page http://www.eeoc.gov/employers/index.cfm.
With regard specifically to criminal records, the EEOC recently issued updated guidance explicitly relating to the use of arrest and conviction records in employment decisions. The guidance document, Enforcement Guidance on Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 is available on the EEOC’s website http://www.eeoc.gov/laws/guidance/arrest_conviction.cfm.