Under the FCRA, a current or prospective employer cannot be sued for defamation, invasion of privacy, or negligence regarding its use of the information in the credit report, unless the information was false and provided with malice or willful intent to injure you. This is a very high legal standard and unlikely to be met in most cases.
However, an employer who violates the FCRA can be sued for actual damages, court costs, and reasonable attorney's fees, and in the case of a willful violation, can be sued for punitive damages. The Federal Trade Commission (FTC) can also sue employers for civil penalties of up to $2500 per violation. Some states may also have laws which protect you in this situation.
If you think your rights under the FCRA have been violated, contact a local attorney and/or fill out an FTC Consumer Complaint Form.