{"id":562,"date":"2021-09-28T21:16:54","date_gmt":"2021-09-28T21:16:54","guid":{"rendered":"https:\/\/forework.com\/?p=562"},"modified":"2022-12-24T21:17:10","modified_gmt":"2022-12-24T21:17:10","slug":"fair-credit-reporting-act-developments","status":"publish","type":"post","link":"https:\/\/forework.com\/fair-credit-reporting-act-developments\/","title":{"rendered":"Fair Credit Reporting Act Developments"},"content":{"rendered":"\n


In another non-employment case with employment impact, the U.S. Supreme Court reiterated that only a plaintiff who has suffered concrete harm may bring suit for damages under the Fair Credit Reporting Act (FCRA) \u2013 the federal law governing background checks, including for employment purposes. Nonetheless, this case serves to remind employers of the need to comply with the technical requirements of FCRA.<\/p>\n\n\n

\n
\"\"<\/figure><\/div>\n\n\n

Under FCRA, if employers use a third-party provider to conduct a background check (i.e., consumer report or investigative consumer report), there are certain required notices and communications. Over the years, there have been numerous lawsuits against employers for failure to comply with FCRA\u2019s strict notice and\/or disclosure requirements. In many instances, employees challenged technical violations \u2013 some on behalf of a class \u2013 even though no actual harm was experienced. This led to the Supreme Court\u2019s 2016 decision in Spokeo Inc. v. Robins<\/a>, in which it held that, in order to sue under FCRA, a plaintiff must establish that they have suffered \u201cconcrete\u201d harm \u2013 meaning real injury, and not simply a \u201cbare procedural violation.\u201d The Supreme Court has now reiterated this position in the non-employment case of TransUnion LLC v. Ramirez<\/a>.<\/p>\n\n\n\n

Although it is good news for employers that they will avoid liability if there is no tangible harm (like economic or reputational damages), nonetheless they should still ensure compliance with FCRA\u2019s technical requirements in order to avoid the possibility of such liability \u2013 and also the aggravation and expense of defending against a lawsuit regardless of the merits. These requirements are as follows:<\/p>\n\n\n\n

General Notice Requirements. <\/strong>Under FCRA, a \u201cconsumer report\u201d is any communication containing information about an individual\u2019s credit history, character, general reputation, personal characteristics, or mode of living. An \u201cinvestigative consumer report\u201d is a consumer report in which information is obtained, at least in part, through personal interviews with neighbors, friends, or associates. These reports include credit checks, criminal background checks, reference checks, educational checks, driving records checks, and social media checks.<\/p>\n\n\n\n

When any consumer report or investigative consumer report is being procured for employment purposes, the employer is obliged to provide the following notices and certifications to the applicant\/employee:<\/p>\n\n\n\n

    \n
  1. Provide the applicant\/employee with a clear and conspicuous written advance disclosure in a stand-alone document, stating that a consumer report or investigative consumer report may be obtained for employment purposes.<\/li>\n\n\n\n
  2. Obtain the applicant\u2019s\/employee\u2019s written authorization for the procurement of the consumer report or investigative consumer report, which may be combined with the stand-alone document referred to in the prior paragraph.<\/li>\n\n\n\n
  3. Certify, to the entity providing the report, that the company has complied with the above notice requirements and that the information from the report will not be used in violation of any applicable federal or state equal employment opportunity law or regulation.<\/li>\n\n\n\n
  4. If the report is going to be used as the basis, in whole or in part, for any adverse employment action (such as a refusal to hire or a decision to terminate), provide the applicant\/employee with a pre-adverse action notice letter, along with a copy of both the report and a copy of the Consumer Financial Protection Bureau (\u201cCFPB\u201d) publication entitled \u201cA Summary of Your Rights Under the Fair Credit Reporting Act<\/a>\u201d before taking the action.<\/li>\n\n\n\n
  5. After waiting a \u201creasonable\u201d amount of time (not specified by the statute or the CFPB), advise the applicant\/employee of the adverse employment action. We recommend at least 5 business days. The letter must explain the adverse action, provide the name and contact information for the consumer reporting agency, state that the consumer reporting agency did not make the decision to take the adverse action and will not be able to provide an explanation for the action, state that the individual has the right to request a free copy of the report from the agency within 60 days, and state that the individual has the right to dispute with the agency the accuracy or completeness of the information in the report.<\/li>\n<\/ol>\n\n\n\n

    Additional Requirements for Investigative Consumer Reports.<\/strong><\/p>\n\n\n\n

      \n
    1. Sometime before but not later than three days after requesting a report, provide the applicant\/employee with written disclosure that an investigative consumer report may be obtained. Note that this requirement is satisfied by the initial disclosure\/authorization form referenced above, which is provided to the applicant\/employee before requesting the report.<\/li>\n\n\n\n
    2. The disclosure must include a statement that the investigative consumer report may include information about the individual\u2019s character, general reputation, personal characteristics, or mode of living.<\/li>\n\n\n\n
    3. The disclosure must inform the applicant\/employee of his\/her right to request a complete and accurate disclosure of the nature and scope of the investigation.<\/li>\n\n\n\n
    4. The disclosure must also inform the individual that the employer is required to make a written disclosure of the nature and scope of the investigation within five days after receiving the individual\u2019s request for disclosure or the date the employer requests the investigative consumer report, whichever is later.<\/li>\n\n\n\n
    5. With the disclosure, provide a summary of rights as contained in the CFPB publication entitled \u201cA Summary of Your Rights Under the Fair Credit Reporting Act.\u201d<\/li>\n\n\n\n
    6. Certify, to the entity providing the report that the Company has and will comply with all notice and disclosure requirements for investigative consumer reports, and further certify that the Company will disclose the nature and scope of the investigation to the individual upon request and within the required five-day period.<\/li>\n\n\n\n
    7. Upon written request by the applicant\/employee made within a \u201creasonable time,\u201d provide complete written disclosure of the nature and scope of the investigation that was requested, within the five-day period noted above.<\/li>\n<\/ol>\n\n\n\n

      Special Rules for Employee Investigations. <\/strong>If an employer uses a third-party consumer reporting agency (such as a human resources consulting firm that regularly does investigations) to conduct an investigation into suspected employee misconduct, or compliance with laws, regulations or the employer\u2019s policies, the employer does not need to provide the notices and disclosures or obtain the authorization described above. However, the employer must provide a summary describing the nature and scope of the investigation to the employee if adverse action is taken based on the investigation.<\/p>\n","protected":false},"excerpt":{"rendered":"

      In another non-employment case with employment impact, the U.S. Supreme Court reiterated that only a plaintiff who has suffered concrete harm may bring suit for damages under the Fair Credit Reporting Act (FCRA) \u2013 the federal law governing background checks, including for employment purposes. Nonetheless, this case serves to remind employers of the need to …<\/p>\n","protected":false},"author":1,"featured_media":563,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","content-type":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-562","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-employment-articles"],"yoast_head":"\nFair Credit Reporting Act Developments - Forework<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/forework.com\/fair-credit-reporting-act-developments\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fair Credit Reporting Act Developments - Forework\" \/>\n<meta property=\"og:description\" content=\"In another non-employment case with employment impact, the U.S. Supreme Court reiterated that only a plaintiff who has suffered concrete harm may bring suit for damages under the Fair Credit Reporting Act (FCRA) \u2013 the federal law governing background checks, including for employment purposes. 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