Fair Credit Reporting Act

The Fair Credit Report (“FCRA”) governs the collection and use of consumer report information and prevents the misuse of consumers’ sensitive information by limiting disclosure to only those with a legitimate need.  When an employer uses consumer reports for “employment purposes,” such as to make decisions to hire, retain, promote, reassign, or terminate an employee, it must comply with FCRA.  FCRA may also extend protections to independent contractors and volunteers in some cases.

FCRA: Background Checks and Credit Reports

Consumer reports include more than just a person’s credit history.  Consumer Reporting Agencies provide employers with applicants’ and employees’ driving records, employment records, criminal history, education information, and licenses.  When an employer seeks a consumer report, however, the employer must follow FCRA at three stages: First, the employer must disclose to the applicant or employee that it seeks to procure a consumer report and must obtain the employee’s written consent. Second, the employer must disclose to the employee or applicant that, based on what is found in the consumer report, it is considering taking “adverse action,” such as no longer considering the person for employment or promotion.  At this stage, the applicant or employee must be given a copy of the report, a written summary of the rights under FCRA, and a reasonable amount of time to correct the information found in the consumer report.  Finally, the Employer must notify the employee or applicant after taking “adverse action” based on the information found in the credit report.

Some employers may also request “investigative consumer reports” on applicants and employees which are based on personal interviews with a person’s neighbors, friends, or associates about the person’s character, general reputation, personal characteristics, and mode of living.  Certain obligations must be met to obtain this kind of report as well, such as giving the person written notice that the employer may request, or has requested, the report and providing information about the nature and scope of the report upon request.

If an employer is found to have violated FCRA, it may be subject to civil liability.  For negligent noncompliance, an employer may be liable for actual damages plus costs and attorneys’ fees; for willful noncompliance, an employer may also be liable for punitive damages.

Washington, like some other states, offers even greater protections than FCRA.  For instance, Washington employers may not procure a consumer report for employment purposes related to a person’s credit unless the information is substantially job-related.

HKM Employment Attorneys represents employees who have been denied employment based on their background checks.  If you have been denied a job or promotion because of a background check, contact a Washington employment attorney to explore your legal options.