Did you know that there are rules that govern how employers conduct background and credit checks on employees or job applicants? Well, there are! First and foremost, these background checks may not be performed without the express written consent from the employee or applicant on whom the check is being performed. The Federal Fair Credit Reporting Act (“FCRA”) imposes a number of requirements on employers who use checking or consumer reporting agencies to do background checks. Before conducting a background check and obtaining a report about an employee or applicant, the employer must (1) provide a disclosure form stating that it may conduct such a screening and request such a report for employment purposes and (2) obtain advance written authorization to do so from the individual. Second, before taking an adverse employment action (i.e., termination, demotion, failure to hire or promote, etc.) based, in whole or in part, on information contained in the report, the employer must provide the individual with (1) a written notice enclosing a copy of the consumer report and (2) a copy of the Summary of Consumer Rights under FCRA form. This is commonly known as the “pre-adverse action notice.” Last, if the employer is prepared to take the adverse action against the employee or applicant, it must then provide an “adverse action” notice to the individual, including contact information for the applicable consumer reporting agency. Notably, if an employer fails to comply with these requirements – even in simply failing to provide employees with the newly updated “Summary of Consumer Rights under FCRA” form, the employer exposes itself to liability for failing to comply with the law. Where the employer “negligently” failed to comply with the law, actual damages and attorney’s fees may be ordered by a court. Where an employer “willfully” failed to comply with the law, the employer may be subject to statutory or punitive damages. The Bottom Line for employees: If you are terminated or denied a promotion because of a background check, you may be entitled to money damages if you can show that your employer did not comply with the requirements of the law in performing the check. Second, if your employer conducts background or credit checks and has not yet provided you with a copy of the revised “Summary Consumer Rights under FCRA” form you may be entitled to money damages.
