Employers performing employee background checks are actually subject to Fair Credit Reporting Act (FCRA) regulations. FCRA applies to all consumer reports and investigative consumer reports, whether they’re conducted in house or by a third-party such as a consumer reporting agency (CRA).
FCRA “is a federal law, and it imposes minimum standards on employers that they must follow when obtaining consumer reports.” Sara Hutchins Jodka outlined in a recent BLR webinar. This terminology, however, means that some employers may not realize they’re subject to FCRA. After all, when conducting an employee background check, we don’t usually call it a consumer report—but that’s what it is as defined by FCRA.
“What are consumer reports? A lot of employers think ‘I’m not getting a consumer report.’ They think ‘consumer’ they think ‘credit report’ only [or] financial information. Well, a consumer report is a background check: You’re checking their reputation. You’re running their social security number. You’re running their driving record. You’re checking all their references. All of those fall into consumer reports.” Jodka told us.
Employee Background Checks: Consumer Reports or Investigative Consumer Reports?
A consumer report is any written, oral, or other communication of any CRA bearing on a consumer’s:
- Credit worthiness
- Credit rating
- Credit standing
- Credit capacity
- Character
- General reputation
- Personal characteristics
- Mode of living
These are all consumer reports if they’re to be used (or expected to be used), or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for employment purposes.
An investigative consumer report means a consumer report, or portion thereof, in which information on a person’s character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer. The primary difference is not the level of investigation, it’s the means of finding the information.
As you can see, FCRA definitely applies to employers conducting background checks in most instances, and since an estimated 92 percent of employers use some form of employee background checks, it will apply to most employers.
For information on staying in FCRA compliance while conducting employee background checks, order the webinar recording of “Conducting Legally Sound Background Checks: New FCRA Requirements and EEOC Guidance Explained.” To register for a future webinar, visit http://store.blr.com/events/webinars.
Attorney Sara Hutchins Jodka of Porter Wright has significant experience representing employers in all facets of employment-related litigation. Ms. Jodka has drafted company handbooks, workplace policies, and more.