Effective January 1, 2013, employers must begin using a new Fair Credit Reporting Act ("FCRA") notice in connection with their background screening process. The Consumer Financial Protection Bureau ("CFPB") recently issued regulations updating the notice entitled "A Summary of Your Rights Under the FCRA" ("Summary of Consumer's Rights"), among other notices.
The updated notices now refer to the CFPB, not the Federal Trade Commission, as the point of contact for any questions pertaining to the FCRA, and provide the CFPB's website address, www.consumerfinance.gov/learnmore.
The FCRA requires employers to follow specific procedures when using third parties to procure consumer reports and/or investigative consumer reports (including credit, criminal background, motor vehicle records, and educational records checks, among others). In particular, employers must provide a copy of the Summary of Consumer's Rights to an applicant or employee during various steps of the background screening process, such as when requesting applicant/employee authorization to perform a background check, when issuing pre-adverse action notices, and when sending adverse action notices (when the employer bases a negative employment action, in whole or in part, on results obtained from a consumer report).
The Summary of Consumer's Rights Notice can be accessed via the CFPB's website or by clicking here.
What Employers Should Do Now
By January 1, 2013, begin using the updated Summary of Consumer's Rights notice, as required under the FCRA:
- When obtaining an employee's or applicant's authorization to procure a consumer report and/or investigative consumer report;
- When notifying an employee or applicant of your organization's intent to take adverse action based on information that you received in connection with a background check; and
- When providing notice that your organization will, indeed, take an adverse action based on information that you received in connection with a background check.
- Review your organization's background screening policies, including all forms and notices to employees, to ensure compliance with the FCRA.
- While reviewing your forms and notices, ensure compliance with any applicable state FCRA statutes in states where your organization does business.
Nicole Scarangella, a Law Student Extern in Epstein Becker Green's New York office, contributed significantly to the preparation of this Advisory.