Don’t Let This Technicality Cost Your Company

A class-action lawsuit sued several large corporations over a small Fair Credit Reporting Act (FCRA) technicality. An FCRA technicality that could be quite costly for small businesses as well.

Huge corporations like Michale’s Stores, Whole Foods, Publix Super Markets, and others are defendants in class-action lawsuits over this technicality. It’s not just retail companies that are sued; Paramount Pictures was slapped with a lawsuit for the same violation.

Large corporations can easily absorb multi-million dollar settlements. However, small companies could be devastated. So what is this FCRA technicality?

The FCRA Technicality

When a company runs a consumer report on a job applicant or for continued employment, they must have written permission from the applicant beforehand. These companies buried the permission as part of their job applications. That is a no-no.

FCRA requires the employer to tell the applicant that the applicant’s consumer report may be used “for decisions related to their employment. The notification must be in writing and in a stand-alone format.” The notice cannot be a part of the job application.

The employer must obtain written permission from an applicant or employee before running a consumer report. You can include this written permission as part of the notification. If you want permission to run a consumer report throughout the person’s employment, it must be clear and concise.

Before Running a Consumer Report

If your company is going to run a consumer report on a job applicant or current employee, you must:

• Tell the applicant or employee you might use that information for an employment decision. The notice must be in a written, stand-alone format.
• Obtain written permission from the applicant or employee. The permission can be part of the stand-alone notice document.
• If you get an applicant through an agency that runs a consumer report, you must certify that you meet the FCRA requirements.

It might be a good idea to check with your state laws relating to the use of consumer reports.

In Summary

Not compiling to the FCRA consumer report requirements can be quite costly. You should use a reputable company to run your consumer reports. A company that knows and meets the FCRA compliance requirements. Also, the company should be knowledgeable of your state consumer report laws. TruDiligence is such a company.

Contact TruDiligence to discuss your consumer report and background check needs.