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What Employers Must Know
Effective September 30, 1997

As an employer, you may use consumer reports for employment purposes as long as you comply with the Fair Credit Reporting Act (FCRA). The term "consumer report" means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility in our case for employment purposes. This includes, but is not limited to, credit reports, criminal reports, motor vehicle reports and workers' comp reports. The term "employment purposes" when used in connection with a consumer report means a report used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.

Key Provisions of the FCRA Amendments

Certification.
Before you can receive a consumer report, you must certify that you are in compliance with the FCRA and that you will not misuse any information in the report in violation of federal or state equal employment opportunity laws or regulations. You comply with this when you agree by submitting your search request to us.

Written Notice and Authorization.
Before you can get a person's consumer report, you must notify the individual in writing - in a document consisting solely of this notice - that a report may be used. You also must get the person's written authorization before you ask a credit bureau for the report.

(A) is made in a writing mailed, or otherwise delivered, to the consumer, not later than three days after the date on which the report was first requested, and

 

(B) includes a statement informing the consumer of his right to request the additional disclosures provided for under this section and the written summary of the rights of the consumer; and

Any person who procures or causes to be prepared an investigative consumer report on any consumer shall, upon written request made by the consumer within a reasonable period of time after the receipt by him of the disclosure required this section, shall make a complete and accurate disclosure of the nature and scope of the investigation requested. This disclosure shall be made in a writing mailed, or otherwise delivered, to the consumer not later than five days after the date on which the request for such disclosure was received from the consumer or such report was first requested, whichever is the later.

Adverse Action Procedures.
If you rely on a consumer report, in whole or in part, for an "adverse action" -- denying a job application, reassigning or terminating an employee, or denying a promotion -- be aware that:

• Step 1: 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 Federal Trade Commission. To access this document, just click on it.

• Step 2: After you've taken an adverse action, you must give the individual notice -- orally, in writing, or electronically -- that the action has been taken in an adverse action notice. To access a sample notice, just click on it. The notice must include:

• the name, address, and phone number of the credit bureau that supplied the consumer report;
• a statement that the credit bureau that supplied the report did not make the decision to take the adverse action and cannot give specific reasons for it; and
• a notice of the individual's right to dispute the accuracy or completeness of any information the bureau furnished, and his or her right to an additional free consumer report from the credit bureau upon request within 60 days.

Non-compliance
There are legal consequences for employers who fail to get an applicant's permission before requesting a consumer report or who 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.

For More Information
For your copy of the FCRA, write: Consumer Response Center, Federal Trade Commission, Washington, D.C. 20580, or call: 202-326-2222; TDD: 202-326-2502.

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