Essentially all of our clients conduct pre-employment background checks on their employees. These background checks generally include a criminal history and license, certification and/or registration records. Sometimes these checks also include driving and/or credit records. All of these reports are considered “consumer reports” under the Fair Credit Reporting Act (“FCRA”) and, accordingly, clients who use a third-party vendor to conduct such searches are subject to the FCRA.

The FCRA requires that the employer provide notice and obtain written authorization prior to conducting the check. The FCRA imposes additional requirements as well, including, for example, that the employer notify an individual in advance of taking adverse action based on information contained in the background check report. For additional information on the FCRA requirements, please click here.

None of this is likely news for our clients. But what may be surprising is that these FCRA requirements apply not just to applicants but to current employees when you update a background check or run a new one in connection with a promotion or retention.

First hint of the day: Provide notice and obtain written authorization for these subsequent background checks.

Unfortunately, the FCRA may be becoming the lawsuit du jour. In the last six months, almost 40 legal challenges have been filed, most of which involve the employer’s alleged failure to comply with the notice/authorization requirements. Many of these suits involved technical violations of the FCRA’s requirement that the notice be provided in a “document that consists solely of the disclosure.” If the form also contains a provision that releases the employer and/or vendor from liability for conducting the background check, the form is technically deficient. Recently, Whole Foods’ online application process, in which a screen contained the disclosure document and “language constituting a waiver of claims against those who obtain the consumer reports,” was challenged in a class action demanding $9.9 million in damages. Domino’s Pizza settled for $2.5 million in a similar action last year.

Second hint of the day: Review your notices and those you have approved to be used by your vendor. If they contain any extra information, such as a release of liability or confirmation of the at-will relationship, separate the information immediately.