Effective September 21, 2018, the Fair Credit Reporting Act (FCRA) requires that employers that use a third-party consumer reporting agency, to conduct background checks on employee applicants, use the updated Summary of Your Rights Under the Fair Credit Reporting Act. The new Summary of Rights Act was issued on September 12, 2018; employers were given very little time to comply with the act.
The FCRA requires that employers follow certain procedures before obtaining a background check by a third party reporting agency. The employer must follow certain procedures if it decides not to hire the applicant (or take an adverse action against an employee) based upon a third party background check. One of the procedures is to provide employees with their “Summary of Consumer Rights” under the FCRA along with the name, address, and phone number of the third-party agency that provided the information. Failure to provide the correct notification can expose employers to legal risk, including class action litigation.
Employers will have to provide the new “Summary of Consumer Rights” form in any pre-adverse action notification that comes as a result of the background check. They must also provide this notification before obtaining a background check if the report includes information stemming from personal interviews conducted by a consumer reporting agency.
The new rule requires that employers use the new “Summary of Consumer Rights.” This new model “Summary of Consumer Rights” requires that the rejected applicant be advised of their right to request that the third-party reporting agency provide the rejected applicant with a free “national security freeze.” This freeze would restrict prospective lenders from obtaining the consumer’s credit report, thereby thwarting identify thieves. The new model form can be found here.
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Guest Editor: Pautsch, Spognardi & Baiocchi Legal Group LLP