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Complying with the Fair Credit Reporting Act when conducting Pre-Employment Checks


When using a third party provider to conduct background checks Florida State University must comply with the Fair Credit Reporting Act.

The FCRA is the federal law that governs the acquisition and use of most background information on applicants and employees. Although it is lawful for employers to obtain and use background information on applicants and employees, they must follow several important procedures when obtaining and using these materials. As defined by the FCRA, consumer reports prepared by a consumer reporting agency that bear on an applicant's or employee's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, when such information is used, or expected to be used, or collected in whole or in part for "employment purposes." Almost any communication of information concerning an applicant for employee from a consumer reporting agency to an employer would potentially be a consumer report. Common examples of consumer reports include Department of Motor Vehicle record checks, criminal background checks, and credit history checks, when this information is obtained from a consumer reporting agency.

Steps that must be taken:
  1. Get written authorization from the applicant before requesting the report from the consumer reporting agency. Consumer disclosure and Authorization for Background checks
  2. Certify to the consumer reporting agency that the consumer report will be used only for permitted purposes under the FCRA, i.e., for employment purposes, and not in violation of any applicable state or federal equal opportunity law or regulation. Document to be supplied by the consumer reporting agency.
  3. If requesting, in addition, an "investigative consumer report" - A consumer report that bears on an individual's character, or mode of living and is obtained through personal interviews - there are additional disclosure requirements. Within three days of requesting such a report, the employer must mail or otherwise deliver written notice to the applicant or employee that the request has been made. The employer must also advise the applicant or employee of his/her rights under the FCRA (found at http://www.ftc.gov/bcp/conline/pubs/credit/fcrasummary.pdf provide complete copy to applicant), including the right to request complete and accurate information from the employer concerning the nature and scope of the investigation. This disclosure must be sent no later than five days after the request by the applicant/employee was received, or the report was first requested, whichever is later. (Ordinarily the University would do it's own reference checking and not use the consumer reporting agency for this service, thereby not triggering these additional requirements).
  4. If the employer decides to reject the applicant or deny a benefit to a current employee based on the background check:

  5. Write a pre-adverse action disclosure letter (sample pre-adverse action notice) Provide a copy of the consumer report to the applicant/employee, and a summary of the consumer's rights under the FCRA (found at http://www.ftc.gov/bcp/conline/pubs/credit/fcrasummary.pdf ).
  6. Wait 5 days before taking the adverse action.
  7. f. After taking adverse action:
    1. Give notice of the adverse action taken within 3 business days of taking it (sample final adverse action letter).
    2. Include the name, address, and telephone number of the consumer reporting agency that provided the consumer report.
    3. Include statement that the consumer reporting agency did not make the adverse decision and cannot provide the consumer with specific reason why the adverse action was taken.
    4. Include notice of the consumer's right to obtain a free copy of the consumer report from the consumer agency within 60 days.
    5. Include notice of the consumer's right to dispute the accuracy or completeness of the report.