Employment Law Alert
Employers Must Use Revised FCRA Forms for Background Checks Performed by Consumer Reporting AgenciesJanuary 1, 2013
The federal Fair Credit Reporting Act (“FCRA”) imposes requirements on employers who use third party consumer reporting agencies (“CRAs”) to obtain consumer reports and investigative consumer reports on employees and applicants. A consumer report is any written, oral or other communication containing information about an individual’s personal and credit characteristics, reputation and/or lifestyle. An investigative consumer report is a consumer report containing information about a person’s character, general reputation, personal characteristics, or mode of living that was obtained through personal interviews with neighbors, friends, associates, or others who have knowledge of such information about the consumer.
To be covered by FCRA, a report must be prepared by a CRA – a business that assembles such reports for other businesses. Generally, any third party that performs background checks for employers is a CRA for FCRA purposes.
Until 2011, the Federal Trade Commission was responsible both for interpreting and enforcing FCRA. However, in July 2011 responsibility for interpreting FCRA was transferred to the Consumer Financial Protection Bureau (the “CFPB”). The CFRB recently issued new regulations modifying the forms employers must use to notify employees and applicants of their rights. Employers must use the new forms beginning January 1, 2013.
The new forms are available here (at Appendices K, M, and N). The forms that the CFRB has revised are “A Summary of Your Rights Under the Fair Credit Reporting Act” (Appendix K), “Notice to Furnishers of Information: Obligations of Furnishers Under the FCRA” (Appendix M), and “Notice to Users of Consumer Reports: Obligations of Users Under the FCRA” (Appendix N).
For more information on this topic, please contact a member of our Employment Practice Group.