Source: https://www.missouriemploymentlawattorney.com/Labor-and-Employment-Law/Employment-Law/Employment-Screening.aspx
Timestamp: 2020-07-06 13:06:09
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Employment Screening | Missouri Employment Lawyer
Employment Screening: the Fair Credit Reporting Act
The Fair Credit Reporting Act (“FCRA”) is a federal law that sets a national standard that employers must follow in employment screening. The FCRA regulates the way credit reporting agencies and employers can collect, access, use, and share information they collect or receive in consumer reports and is designed to help ensure the accuracy, fairness, and privacy of consumer data.
Existing and prospective employees may file private lawsuits seeking damages for violation of the FCRA. The law is also enforceable through government action. In either event, legal representation is necessary to understand your legal rights and duties under the FCRA. Contact the Law Offices of Kevin J. Dolley if you seek legal representation in connection with an issue or claim under the FCRA.
Congress enacted the FCRA to ensure that consumer reporting agencies exercise their responsibilities with fairness, impartiality, and respect for the consumer’s right to privacy. 15 U.S.C. § 1681(a). Under the FCRA, consumer reporting agencies are required to “adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with the requirements of [the FCRA].” 15 U.S.C. § 1681(b).
A consumer reporting agency “regularly engages…in the practice of assembling or evaluating consumer credit information or other information on consumers (i.e., individuals) for the purpose of furnishing consumer reports to third parties…” 15 U.S.C. § 1681a(f). A consumer report is any written, oral or other communication of any information…bearing on an individual’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used in establishing the individual’s eligibility for credit, insurance, or employment.” 15 U.S.C. § 1681a(d). This includes criminal convictions, certain records of arrests, and information obtained through interviews with neighbors, friends, or associates of an individual. 15 U.S.C. §§ 1681c(a), 1681a(e).
Consumer reporting agencies may furnish consumer reports under various circumstances, including in response to court orders, at an individual’s instruction, to a company for employment purposes, in connection with credit transactions, and more. See 15 U.S.C. §1681b(a). Employers frequently use consumer reports to make hiring decisions, screen applicants, and monitor existing employees. Hiring and termination decisions are often based, in whole or in part, on the contents of consumer reports.
Employers may use consumer reports during the hiring process but must follow certain requirements when doing so. When a consumer report is provided for employment purposes, certain disclosure requirements apply. These include notifying the individual in writing that a report may be obtained for employment purposes and obtaining the individual’s written authorization. 15 U.S.C. § 1681b(b)(2). An employer or other entity may not procure a consumer report for employment purposes without satisfying these notice and authorization requirements. Id.
Arrests records that are more than seven years old cannot be included in consumer reports, unless the arrest resulted in a criminal conviction. 15 U.S.C. § 1681c(a). Civil suits, civil judgments, paid tax liens, and accounts placed for collection that are more than seven years old also may not be included. Id.
Adverse Actions and Notice Requirements
Under the FCRA, an “adverse action” includes a denial of employment or any other employment decision that adversely affects any current or prospective employee. 15 U.S.C. § 1681a(k). Before taking adverse action based upon a consumer report, an employer must provide a copy of the report and a written description of rights. 15 U.S.C. § 1681b(b)(3)(A). If adverse action is taken, the employer must, within three business days, provide notice: that such action was based on a consumer report, the contact information of the consumer reporting agency, that the consumer may request a copy of the report, and that the consumer may dispute the accuracy and completeness of the report. 15 U.S.C. § 1681b(b)(3)(B).
Numerous federal courts have addressed the issue of simultaneous provision of a report and notice of adverse action. Federal law is clear: “Simultaneous provision of a consumer report with a notice of adverse action fails to satisfy the § 1681b(b)(3)(A) requirement.” Beverly v. Wal-Mart Stores, Inc., 2008 WL 149032, at *4 (E.D. Va. Jan. 11, 2008). “The clear purpose of this section is to afford employees time to discuss reports with employers or otherwise respond before adverse action is taken.” Goode v. LexisNexis Risk & Information Analytics Group, Inc., 848 F. Supp. 2d 532, 537 (E.D. Pa. 2012); see also Johnson v. ADP Screening and Selection Services, Inc., 768 F. Supp. 2d 979, 983 (D. Minn. 2011) (Congress’s use of the word “before” shows that there must be some time between notice and action). A prospective employer violates the FCRA when it denies employment to a prospective employee without providing, or by simultaneously providing, a copy of the report and the prospective employee’s FCRA rights.
Accuracy of Consumer Reports
“Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.” 15 U.S.C. § 1681e(b). “In order to prevail in a private civil action under 1681e(b), Plaintiff must establish that (1) the consumer reporting agency failed to follow reasonable procedures to assure the accuracy of its reports; (2) the report in question was, in fact, inaccurate; (3) the plaintiff suffered an injury; and (4) the consumer reporting agency’s failure caused the plaintiff injury.” Jacobs v. Experian Information Solutions, LLC, 2011 WL 2837445, at *1 (D. Utah July 14, 2011).
Consumer reporting agencies must also maintain “strict procedures designed to insure that whenever public record information which is likely to have an adverse effect on a consumer’s ability to obtain employment is reported it is complete and up to date.” 15 U.S.C. § 1681k(a)(2). The analysis relating to strict procedures is the same as the analysis for determining whether a consumer reporting agency failed to maintain reasonable procedures. Hawkins v. S2Verify LLC, 2016 WL 107197, at *2 (N.D. Cal. Jan. 11, 2016).
If a consumer report is inaccurate and an employee suffers an adverse action as a result, a consumer reporting agency may be liable if it failed to follow reasonable procedures to assure the maximum possible accuracy of its report. Liability could result from improperly aggregating criminal history information without conducting individualized verifications to determine accuracy, failing to investigate or verify the information in the report after being told it was inaccurate, or failing to contact public agencies to verify the accuracy of information.
Reasonable Reinvestigations
Consumer reporting agencies must conduct a reasonable reinvestigation once an individual disputes the accuracy of the information contained in a consumer report. 15 U.S.C. § 1681i(a)(1). The consumer reporting agency has 30 days, subject to a 15-day extension, to determine whether the information is inaccurate and record the current status of the information, or delete the item from the consumer’s file. Id. The consumer reporting agency shall also provide notification of the dispute to any person who provided any item of information that is in dispute, along with all relevant information regarding the dispute that is received from the consumer. 15 U.S.C. § 1681i(a)(2). Once a determination regarding accuracy is made, the agency must notify the consumer within five business days. 15 U.S.C. § 1681i(a)(3). If the information is confirmed as inaccurate, it shall be deleted or modified and the provider of that information must be notified. 15 U.S.C. § 1681i(a)(5).
Private Rights of Action Under the FCRA
Any person who willfully fails to comply with any provision of the FCRA is liable for actual damages, punitive damages, costs, and attorneys’ fees. 15 U.S.C. § 1681n. Reckless disregard of a requirement of the FCRA qualifies as a willful violation within the meaning of § 1681n(a). Safeco Ins. Co. of America v. Burr, 551 U.S. 47, 71 (2007). Actual damages may include emotional distress damages. Cortez v. Trans Union, LLC, 617 F.3d 688, 719 (3rd Cir. 2010).
Negligently failing to comply with any provision of the FCRA makes one liable for actual damages, costs, and attorneys’ fees. 15 U.S.C. § 1681o. To prove a claim for negligent failure to comply with the FCRA, a consumer must show a causal relationship between the FCRA violation and the claimed harm. Crabill v. Tans Union, L.L.C., 259 F.3d 662, 664 (7th Cir. 2001).
Government Enforcement of the FCRA
The Federal Trade Commission (“FTC”) is authorized to enforce compliance with the FCRA. 15 U.S.C. § 1681s(a). The FTC may file a civil action to recover civil penalties for “a knowing violation which constitutes a pattern or practice of violations under [the FCRA].” Id. Violations are punishable by a civil penalty of up to $2,500 per violation. Id.
The Consumer Financial Protection Bureau (“CFPB”) now shares responsibility for enforcement of the FCRA with the FTC. 15 U.S.C. § 1681s(b)(H); 12 U.S.C. § 5561 et seq. The CFPB may enforce the FCRA through administrative proceedings or civil actions and may seek legal or equitable relief. Other federal agencies, including the Securities and Exchange Commission, may also enforce particular provisions of the FCRA. § 1681s(b).
Employers should understand their duties and obligations under the FCRA prior to taking adverse action against a current employee or job applicant based upon a consumer report. Failure to understand the FCRA’s requirements could result in costly litigation and liability for substantial damages. The actions of a company’s employees can result in a lawsuit, even if senior management was unaware of what happened.
Consultation with an attorney who is experienced in this area can ensure compliance with the FCRA. The Firm’s attorneys are available for consultations and employee training that will explain your rights and obligations as an employer under the FCRA. If you are facing an FCRA issue, contact our attorneys today for a consultation designed to ensure your rights and interests are protected.
Contact our Firm to obtain experienced legal counsel to address employment screening related issues or other matters under the FCRA by calling (314) 645-4100 or by email at kevin@dolleylaw.com.