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New FCRA Requirements on Employee Background Checks

by Adair Melinsky Buckner on Feb. 08, 2013

Employment Employee Rights Employment  Labor Law 

Summary: As of 1-1-3 FCRA is administered by new agency & new forms are required.

Reminder: Requirements Under The Fair Credit Reporting Act For Employment Background Checks and New Notice Forms Required As Of 1/1/13 

As you all know, employers are subject to the Fair Credit Reporting Act ("FCRA") when they use third parties to perform background checks on job applicants or employees. The FCRA requires employers to notify applicants/employees before ordering a background check or taking an adverse employment action based on the results of a background check. It also requires an employer to obtain the application/employee's consent prior to ordering a background check. An employer who fails to comply with these requirements is subject to civil penalties, punitive damages, and attorneys' fees.

However, if employers use their own employees, such as a human resource professional, to conduct background checks by verifying references or credentials, compliance with the FCRA is not triggered.  There is a caveat to this, though.  If you use an outside consultant or agency, other than a governmental law enforcement agency like the Texas DPS website or FBI website, to conduct a background investigation or any other background check of an applicant/employee, the requirements imposed by the FCRA do apply.

Effective January 1, 2013, employers required to follow the FCRA must provide new and updated notices to applicants and employees. The recently created Consumer Financial Protection Bureau ("CFPB") issued these new requirements and deadlines. The CFPB is now the enforcement authority over the FCRA, replacing the Federal Trade Commission, which previously enforced the FCRA.  The 2013 change includes modification to the mandatory "Summary of Rights" form. This form is a standard notice that must be provided to an applicant or employee subject to an investigative consumer report or when a "pre-adverse action" notice is sent to an applicant or employee. A copy of the new notices is available at www.consumerfinance.gov.

Adair Buckner is an Amarillo attorney with Buckner & Cross, L.L.P.  She is Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization. Her other areas of practice include business law, business disputes, commercial litigation, estate planning, and probate. You can reach Adair at (806)-322-7777 or adair@bucknercross-law.com. This material is not intended to be legal advice. The contents are intended for general information purposes only.

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