Employers who use a third party to conduct a background check on an applicant or employee for employment purposes must comply with the FCRA. But what many employers may have forgotten, is that the Fair and Accurate Credit Transactions Act (FACTA) also imposes upon them some obligations when conducting a background investigation. The FACTA is a 10-year-old law enacted by Congress to combat identity theft. The FACTA amended the FCRA by fixing a problem that required employers who retain a third party to investigate workplace misconduct to comply with the FCRA’s four-step process: the disclosure, authorization, pre-adverse notice and adverse notice procedures. Employers who engage a third party to investigate workplace misconduct no longer have to provide advance notice to the employees under investigation, obtain their prior consent, or disclose the contents of the investigator’s report prior to taking adverse action based on the report. However, employers still have some obligations to employees when they have an outside person or agency do an investigation under the FACTA. They must provide some summary information, but they do not have to provide even this information unless and until they take an adverse action. Remember, the FACTA is the exception, not the rule. Given the increase in FCRA class lawsuits, employers that use background checks for employment purposes must ensure they are taking proper steps to ensure compliance with the applicable provisions of the FCRA.