Employers sometimes obtain consumer reports from consumer reporting agencies (CRAs) when they hire new employees or evaluate existing employees for promotion, reassignment, or retention. When an employer obtains a consumer report from a CRA for such purposes, the employer must comply with the Fair Credit Reporting Act. In addition, when an employer uses an employment reference checking agency or other CRA to verify an applicant's references, the employer must comply with the Act.

Notice and Consent

The Act requires an employer to notify an individual in writing before obtaining the individual's consumer report for employment purposes. The document provided to the individual must consist only of the notice. The individual must consent in writing before the employer obtains his consumer report.

Special rules apply to the trucking industry.

Adverse Action

Employers must meet the requirements of the Act before and after taking "adverse action" against an individual. Adverse actions include denying a job application, reassigning or terminating an employee, or denying a promotion.

(1) Pre-adverse Action Disclosure. Before an employer takes adverse action against an individual, the employer must provide the individual with a "pre-adverse action disclosure" that includes a copy of the individual's consumer report and a copy of a Federal Trade Commission document entitled "A Summary of Your Rights Under the Fair Credit Reporting Act."

(2) Adverse Action Notice. After an employer takes adverse action against an individual, the employer must provide the individual with an oral, written, or electronic "adverse action notice." The adverse action notice must include:

* the name, address, and telephone number of the CRA that furnished the consumer report;

* a statement that the CRA did not make the decision to take adverse action against the individual and cannot give specific reasons for it; and

* a notice of the individual's right to dispute the accuracy or completeness of the information in the consumer report and his right to receive a free copy of the report from the CRA upon request within 60 days.

Violations of the Act

Individuals may sue employers for violations of the Act. Such individuals may recover damages, court costs, and attorney fees. Punitive damages may be recovered for deliberate violations of the Act.

Copyright 2010 LexisNexis, a division of Reed Elsevier Inc.