Employer Obligations When Using Third Parties to Conduct Background Checks

Employers who use third parties to conduct employment background checks should consider their obligations under the Fair Credit Reporting Act (FCRA) to avoid possible liabilities. The FCRA applies to consumer reporting agencies that produce consumer reports, including credit reports, criminal history reports and driving records. Before these reports are obtained, employers must first provide applicants and employees with a written disclosure stating their intent to do so. When adverse action is being considered, the employer must provide a copy of the report, a “pre-adverse action” letter and a written “summary of rights” under the FCRA. If adverse action is taken, the employer must then provide notice to the applicant or employee and provide him or her with certain information required by statute.

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