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Labor & Employment Law

: Employment Advisory

By Rod Stephens

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Screening: Do it Right

Wash

ington employers who perform background or credit checks on their employees have to be well versed in their obligations under the Fair Credit Reporting Act (the federal law) as well as the Washington State Fair Credit Reporting Act. Both of these laws apply to consumer reports that contain information about a person?s character, general reputation, or lifestyle and their personal or credit characteristics.

Under recent changes to the Washington State Fair Credit Reporting Act you may not obtain a consumer report that obtains information bearing on a person?s creditworthiness, credit standing, or credit capacity unless it is required by law or substantially job related and the reason for use of the information are disclosed in writing. Limitations are also imposed on investigative consumer reports. Investigative consumer reports are designed to get information about a person relating to their character, general reputation, personal characteristics, or mode of living which are typically obtained through personal interviews of others. Employers are required to provide notice that an investigative consumer report may be made. That disclosure must be in writing and mailed or delivered to the individual no later than three days after the report is requested.

Employers that request either a general consumer report or an investigative consumer report, must:

Provide a clear and conspicuous disclosure in writing advising the individual that it may obtain a consumer report. The disclosure must be a stand alone document and cannot be included within an application form.

The employer must obtain written authorization obtain the report.

In the event adverse action is taken based on the results of a consumer report or investigative consumer report, such as denying employment, the employer must provide a copy of the report and written descriptions of that person?s rights under the FCRA.

Among the rights of which an individual must be informed, in the event of adverse action taken as a result of either a consumer report of investigative consumer report, are the following:

The information in their file has been used against them.

The individual may request and obtain all of the information in the files of a consumer reporting agency.

The right to ask for a credit score.

The right to dispute incomplete or inaccurate information.

Credit reporting agencies must correct or delete inaccurate, incomplete or unverifiable information.

Consumer reporting agencies may not report outdated negative information.

Access to their file is limited to people with a valid need such as a creditor, insurer, employer, landlord, or other business.

The individual's consent must give their consent for reports to be provided to employers.

The right to limit ?pre-screened offers? of credit and insurance, based on information in the report.

The entitlement to seek damages from violators of the FCRA.

In the case of individuals that are victims of identity theft or in the military on active duty, there are additional rights available.

After providing a copy of the report and the FTC notice, before an employer can take any type of adverse action based on the credit report, the employer must provide the following information to the employee and/or job applicant:

Notice of the adverse action to be taken,

The name, address and phone number of the reporting agency from which the report was obtained,

A statement that a reporting agency did not make the decision to take the adverse action and cannot provide specific reasons why the action was taken,

Notice of the individual?s right to obtain a free copy of the report from the reporting agency within 60 days, and

Notice of the individual?s right to dispute the accuracy and completeness of the information in the report with the reporting agency.

In addition to the reporting requirements under the FCRA, employers employers are required to take reasonable measures to protect against the unauthorized access or use of information obtained in consumer reports when disposing of them. An example would be to implement policies and procedures that require shredding or burning of documents containing consumer information so that the information cannot be reconstructed or read. This requirement to appropriately dispose of consumer reports has placed new obligations on employers to assure that when large volumes of information are disposed of, particularly if it is done through a third party such as a commercial shredding company, to assure the vendor exercises appropriate diligence when disposing of sensitive information.

The Bottom Line: Screening can be a valuable in selecting the right person for a job. Care should be taken to insure that it is done right.

Nothing in this blog should be considered legal advice or to form an attorney client relationship. The information provided is general in nature. Nothing can substitute for a consultation with a legal professional who can address your particular legal problem.

Full post as published by Employment Advisory on September 23, 2007 (boomark / email).