The Fair Credit Reporting Act protects consumers and the personal information that credit reporting agencies collect. This federal law governs who has access to an employee’s financial information and regulates how employers can use this information. Suppose an employer violates the Fair Credit Reporting Act by misusing the information provided by an employee or through a consumer credit report. In that case, the employee may have a valid legal claim.
The Fair Credit Reporting Act is extremely complex, and working with an attorney who has an understanding of the law can help you understand your rights and navigate the claims process more effectively. If you feel the turn player has violated your rights under the Fair Credit Reporting Act, it is important that you reach out to an attorney as soon as possible to learn more about your rights. At HKM Employment Attorneys, we have a proven track record of successfully representing clients in a wide range of employment matters, including those involving the Fair Credit Reporting act.
Understanding the Fair Credit Reporting Act
The Fair Credit Reporting Act is a federal law regulating how credit reporting bureaus gather information on citizens to create credit reports. The law also protects credit reports’ privacy, accuracy, and fairness. It contains rules on how long credit reporting agencies must keep the information, how they obtain it, and how it needs to be shared with others, including potential employers.
In addition to regulating the credit reports themselves, the Fair Credit Reporting Act also restricts employers who use credit reports as part of criminal background checks on employees or applicants. For example, the credit report requires employers and potential employers to get written consent to run a background check and obtain a potential client’s credit report.
Suppose the employer rejects an applicant or employee based on this information. In that case, the employer must provide the employee or applicant with a written copy of the credit report used in the background investigation process. Doing so ensures that the employee is aware of its contents and can contact the credit bureau to correct any mistakes that could have led to an unfairly low credit score.
Ensuring Information in the Consumer Report is Up-to-Date and Accurate
The Fair Credit Reporting Act also requires employers and potential employers to take reasonable steps to ensure the information provided is up-to-date and accurate. For example, Suppose an employer applicant disputes the contents of the consumer credit report. In that case, the employer must make a reasonable investigation of the report and inform credit reporting agencies of any errors it discovers.
The employer cannot simply refuse to hire the employee based on a credit report that may not be accurate when the employee informs them of such. New York does not have any specific laws referring to credit information on a consumer’s credit file, as some other states have passed. Generally, employees and potential employees should look to the federal Fair Credit Reporting Act for assistance.
Investigative Consumer Reports on New York Employees
Some employers go beyond obtaining a consumer credit report for an employee or potential employee. They may pursue an investigative report. Investigative reports are more invasive and thorough than consumer credit reports. as a result. They can also create an invasion of privacy for a potential employee or employee.
Investigative consumer reports may ask detailed questions about the employee’s mode of living, reputation, personal characteristics, and character. When pursuing these investigative reports, an employer must provide written notice that they may request or have requested an in-depth report. They also need to provide detailed information about the scope of the investigative report when an employee or potential employee requests that information.
How Do Credit Reports Help in Employment Decisions?
Suppose an employer wishes to use the information received in a consumer credit report to make an employment-related decision. In that case, the employer is legally required to notify the applicant or employee. The notification must be in writing and say they are using the information in the credit report for a bona fide, substantially related job purpose. The Fair Credit Reporting Act goes further and requires employers to receive the job applicant’s or employee’s permission before obtaining a consumer credit report. They must notify the employee if they decide to take an adverse employment action based on the information in the consumer credit report. Examples of adverse actions an employer can take include the following:
- Refusal to hire the employee
- Terminate the employee’s employment
- Demote, reassign, or transfer the employee
- Any other action that has a negative effect on the employee
What Damages are Available in an FCRA Case?
If your employer has violated your rights by failing to comply with the Fair Credit Reporting act, you can pursue a claim against your employer. You may be able to obtain financial damages from your employer. Several types of Damages are available under the Fair Credit Reporting act. Compensation for violations can include actual monetary damages. For example, if you were not hired because of misuse under the Fair Credit Reporting Act, you may be able to recover damages for the compensation you would have earned up until now if you had been hired.
You can also pursue attorneys’ fees and costs, and the employer may be required to pay fines. If you prove that your employer intentionally or recklessly violated the Fair Credit Reporting Act, additional punitive damages may also be available. Punitive damages are intended to deter other people from engaging in similar behavior while punishing companies for willful and wanton misuse of consumer credit card information.
Discuss Your Case With a Skilled New York Employment Attorney
Has your employer taken adverse action against you because of incorrect or misused information in a consumer credit report? Have you been denied a job, laid off, or suffered any other adverse action? If so, HKM Employment Attorneys are here to help. We have an in-depth understanding of the Fair Credit Reporting Act and will advise you of your rights and help you protect them. Contact the New Paltz, New York-based HKM Employment Attorneys to schedule an initial case evaluation and learn more.