Employment Credit Check Reports

When you apply for a new job or are being considered for a promotion, your employer or potential employer may do a background check, and in the process access your credit report. In fact, it’s estimated that about half of all employers pull credit reports on potential employees. An employer credit check is perfectly legal – providing the employer follows certain procedures in accordance with the law. Here’s what you need to know about employment credit reports.

What is the Employment FCRA Compliance Checklist?

The federal Fair Credit Reporting Act (FCRA) requires an employer to use the employment FCRA compliance checklist when it requests a consumer report about a prospective employee. On the one hand, you want the job. On the other hand, you want to keep personal information, like your social security number, private. The strict FCRA rules balance your prospective employer’s need for information about you with your desire to limit access to your personal information. If the employer fails to follow the rules you can sue it for damages. In recent months, Home Depot was sued for allegedly giving improper disclosures and authorizations and Starbucks was sued for allegedly giving applicants inadequate time to correct inaccurate information in their reports.

The FCRA had written rules to protect you when you must share your information to get something you want such as a loan for house or car, life insurance, or a credit card. The Consumer Financial Reporting Bureau (CFRB), a federal agency, enforces these rules and can fine companies that break the rules. The rules apply to whoever requests the information, to the credit reporting agency that compiles your information and prepares the report, and to those who supply the information to the reporting agency. The FCRA rules place a heavy burden on those who want the report to use accurate information and to keep your information secure.

An employer may want a consumer report before it hires or promotes you. There are three types of reports:

  1. A credit report. This contains information about your credit and is usually ordered from Equifax, Experian, or TransUnion, the three major credit agencies. (A credit report is different from your credit score which is a number representing the quality of your credit)
  2. A consumer report. This report includes personal information such as prior names and social security number, credit information, and public information such as judgments, liens, and lawsuits. This report may contain your criminal and driving records and may also contain written information about your general reputation, character, personal characteristics, and mode of living. The employer orders this report from specialized credit reporting agency.
  3. An investigative consumer report. This report differs from a consumer report only in that character and reputation information are obtained through interviews with neighbors, friends, or associates.

The employer selects the type of report and the specific desired information. It is important that you know which type of report your employer is requesting.

Item One on the Extensive Employment FCRA Compliance Checklist Is a Request to You

  • You must sign a stand-alone authorization for the particular report on a separate document from the employment application.
  • On a separate stand-alone form, the employer must disclose to you that he may request a particular report on you.

He must certify in writing to the Consumer Reporting Agency (CRA)that he will:

  • Use the information only for employment purposes
  • Not use the information in violation of state or federal law
  • Obtain the necessary disclosure and authorization
  • Give required notices if an adverse action is taken against you based on findings in the consumer report
  • Give you the additional information required if an investigative consumer report is done

If the employer decides not to hire or promote you based on the information in the report it must:

  • Send you a pre-adverse action notice letter
  • Include a copy of your report
  • Include a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act”

(After you receive the action notice letter, you have an undetermined amount of time to dispute any portion of the report)

If the employer concludes that it has given you sufficient time to dispute the report, it must send you an adverse action letter which includes:

  • The name, address, and telephone number of the CRA
  • A statement that the CRA had no role in the decision and cannot explain why the decision was made
  • A statement that you may dispute any information with the CRA
  • A statement that you can request additional free copies of the report from the CRA for 60 days
  • Another copy of “A Summary of Your Rights Under the Fair Credit Reporting Act”

Some State Laws Add Items to the Employment FCRA Compliance Checklist

 California, Colorado, Connecticut, Delaware, District of Columbia (D.C.), Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington have restricted the use of credit checks by employers in employment decisions. Employers who violate these laws may face lawsuits in state court along with possible federal lawsuits for FCRA violations. In 2017, Uber settled a lawsuit by applicants claiming they had no opportunity to correct errors in their reports for $7.5 million and Kelly Services settled a lawsuit by applicants claiming Kelly used improper disclosure forms for $6.7 million.

If you or someone you know is the victim of FCRA violations, complete our online form or call 475-277-2200. Lemberg Law’s legal team will evaluate your case at no cost to you, and will help you get the justice you deserve.


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