FCRA Basics for New Attorneys: Employment Background Checks, Compliant Policies, Penalties

The FCRA governs how employers obtain and use consumer reports including those used for standard employment background checks such as credit reports, criminal history reports, and driving records. The FCRA applies when employers use a third party to conduct investigations and has stringent requirements for employers to follow or risk severe penalties.

The FCRA requires employers to disclose to employees and applicants that consumer reports may be used for employment decisions and obtain employee and applicant consent. If the consumer reports provide information that could result in an adverse employment action, employers are required to take additional steps including providing the employee or applicant with notice that includes a copy of the consumer report that was relied on to make the decision and a copy of their FCRA rights.

Listen as our expert panel provides an overview of FCRA requirements for employers when conducting background checks and offers best practices for helping employers create FCRA-compliant policies to mitigate the risk of enforcement action.

I. Introduction

A. FCRA overview

B. When do employers need to comply with the FCRA?

II. FCRA employee background check requirements

A. Disclosure to applicants and employees

B. Applicant or employee consent

C. Adverse action and notice

D. Disposing of consumer reports

III. Potential penalties for noncompliance

IV. State law considerations

V. Best practices for drafting FCRA-compliant policies

The panel will review these and other important considerations:

• What types of reports or investigations that may be used by employers when making employment decisions are covered under the FCRA? 
• When are employers required to comply with the FCRA? What is required of employers?
• What potential penalties may be imposed on employers for noncompliance?
• What are best practices for drafting FCRA-compliant employment policies?