Employee Background Checks
Significant Additional Notice Requirements Under the FCRA
Take Effect July 21
Michael A. Gamboli, Esq.
Beginning July 21, 2011, all employers who use a credit score as a factor in
making an adverse decision regarding an applicant or employee must provide
significant additional information to comply with Federal law.
As previously reported, the Federal Fair Credit Reporting Act (FCRA) requires
employers to provide certain information to applicants or employees prior to
taking adverse action based in whole or in part upon a consumer report. This
information includes, for example, the fact that the decision was based in part
upon the consumer report, the identity and contact information for the consumer
reporting agency that provided the report, and a detailed summary of the
individual’s rights under the FCRA. In addition to these requirements, the Dodd-
Frank Wall Street Reform and Consumer Protection Act amended the FCRA
to require an employer who uses a credit score (as defined in the Act) to make an
adverse decision to provide the applicant or employee with significant
additional information, including:
• The actual credit score.
• The identity of the entity that provided the score.
• Information about the range of possible scores under the particular rating
• The key factors that adversely affected the credit score.
• The date the score was created.
Employers need to comply with this reform starting on July 21. Based upon
these additional requirements, employers may wish to reconsider their use of
actual credit scores in making employment decisions especially when a credit
score has no substantive relationship to an employee’s qualification for the
position in question.