The Fair Credit Reporting Act has been changing the rules around backgrounds for the last few years. Gradually each state is incorporating additional laws related to this Act onto their books. These are the newest changes to the Fair Credit Reporting Act and related state laws that you should know when reviewing background checks.
Changes Affecting Consumer Reporting Agencies
The biggest change is how the Consumer Reporting Agencies, commonly known as background check companies, gather and use this information. According to the Federal Trade Commission, Consumer Reporting Agencies need to get certification from their clients on the purpose of the background report. The most commonly accepted reason is for pre-employment purposes.
In addition to getting this certification in the beginning, Consumer Reporting Agencies need to ensure their clients follow the correct Adverse Action processes either on their own or through the Consumer Reporting Agency. This process includes providing the consumer a copy of the report, the disqualifying items, and a chance to dispute the findings.
State-Specific Laws and the Fair Credit Reporting Act
Some state-specific laws around the Fair Credit Reporting Act appear in states like California and New York that limit the ability for companies to request a credit report on potential employees. Many state-specific laws restrict the requesting of credit reports in a pre-employment background check to either public service employees or to those candidates who met a minimum salary requirement. Sterling Talent Solutions reported the following updates to the Fair Credit Reporting Act:
- Albany New York restricts the ability to inquire about salary.
- Washington DC passes laws to prevent a credit report to be run on consumers.
Stay Up-to-Date With TruDiligence
With these changes being reviewed and changed regularly, the best practice is to be sure to stay up to date on the Fair Credit Reporting Act. Following industry articles and blogs is the best way to remain current on these changes and to protect your business. Have additional questions about the Fair Credit Reporting Act? Please contact us today!