The Fair Credit Reporting Act (FCRA) affects anyone who wants to look at someone’s credit report: a car dealer, a credit card company, a store that offers its own credit card.
What you might not know is that it also affects what you can and can’t ask when doing an employment background check. The FCRA also regulates how you can use the information.
It’s Public Knowledge. I Can Use It, Right?
A common misconception is that if it’s in the public record, it should be fair game and reportable to an end user.
This is not true.
And it can change, depending upon the applicant’s projected salary.
For example, if an applicant makes, or will make, less than $75,000 per year, non-convictions from civil or criminal matters can only be reported for seven (7) years from the case’s filing date. (Convictions can be reported forever.)
That’s the federal law. State laws can be even more stringent: New York says that you can never report non-convictions, unless the case is pending, and only report convictions for the past seven years from the date of disposition. However, that limit only applies to an income or projected income threshold of $25,000, not the $75,000 limit the FCRA specifies.
Confused yet?
One more wrinkle: If someone was convicted and incarcerated, reporting can change again.
Confirm, Confirm, Confirm
Another restriction imposed by the FCRA is that the matters being reported must be current and accurate. If a judgment has been paid, for example, that needs to be reported. If a media article shows that someone was arrested, that needs to be further researched with the source (e.g., court records) to confirm the information and to gather any applicable additional information.
You must also make sure that the report includes information on the right person. Confirmation can be problematic when researching people with common names, especially for civil matters where other identifying information isn’t readily available.
If someone’s identity cannot be positively confirmed, this information should not be reported to the end user.
But your due diligence doesn’t end there. If you plan to take adverse action against an applicant, such as not hiring him/her, in whole or in part because of information in the background check, the FCRA outlines a specific process that must be followed.
And, again, some states may impose even more stringent requirements than the feds.
Be Cautious
Companies have faced seven-figure penalties for non-compliant background checks. It pays to be cautious. Consult with an attorney, and take care when choosing a background check provider.
Do you have questions about FCRA implications for your employment background check program? Please call our office at 212.871.1274 or post a comment below.
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