New Rule for Criminal Background Checks Under the Federal Fair Credit Reporting Act
By: Robert W. Small
Most Employers know that under the federal Fair Credit Reporting Act (“FCRA”) if you wish to obtain a criminal background check or other form of “consumer” background check on an applicant for employment or an existing employee whose employment you are considering terminating, you must first provide to the applicant or employee a Summary of Consumer Rights and obtain a written consent on a “stand alone” form; that is a form that contains no other information but the consumer’s rights under FCRA. Failure to do so or to accord an employee or prospective employee certain rights if an unfavorable employment decision is to be based on the background report exposes Employers to significant penalties under FCRA and analogous state statutes.
Less known is that, in the wake of large scale computer hacking of Personal Identifiable Information (“PII”), Congress enacted the Economic Growth, Relief, and Consumer Protection Act (“Act”) which took effect on September 21st. Among other things, the Act requires consumer reporting agencies to provide to consumers, free of charge, a “national security freeze.” Such a “freeze” restricts lenders from obtaining access to individual background reports; the thinking being that such restrictions will make hacking of consumers’ PII more difficult. The Act impacts Employers because it requires that, whenever a “consumer” (which includes an applicant for employment or an existing employee) is entitled to receive a “Summary of Consumer Rights” he or she also must be advised of the free national security freeze.
The Bureau of Consumer Financial Protection has updated its forms to include the new notice in its “Summary of Consumer Rights” and all Employers who use consumer background checks should be sure that they are now using the new form. Employers must remember that the definition of “consumer report” under FCRA is broad and includes not only criminal background checks but, credit reports, driving records, and any other report obtained from a third-party “consumer reporting agency.”
Employers should obtain and use the new form immediately and be sure that those within their organization involved in the formalities of the hiring or termination process are fully aware of this new obligation under FCRA and the Act.
If you have any questions, or would like additional information, please contact Bob Small, Partner in Reger Rizzo & Darnall’s Employment Practices Group, at 215.495.6541, or via email at firstname.lastname@example.org.
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