Governmental Relations

Legal Update Regarding Background Checking

Contact: Carlile Patchen & Murphy (Columbus, Ohio)

If your organization conducts background checks on applicants or employees, you may have heard that, as of January 1, 2013, you must use new forms in order to comply with the Fair Credit Reporting Act (FCRA).  The FCRA previously fell under the enforcement authority of the Federal Trade Commission, but now is administered by the newly created Consumer Financial Protection Bureau (CFPB).


Anytime a background check is done by a third party Consumer Reporting Agency, an employer must comply with the FCRA. This includes specific requirements about notice that must be given to the applicant or employee, the form of the consent that must be obtained, and directives on issuing pre-adverse-action and adverse-action letters if the background check reveals information that leads to a negative decision toward the applicant or employee such as not to hire or promote.   These letters require the employer to inform the applicant or employee on how discrepancies can be reported and how to contact the CFPB. The new forms update the contact information for the current enforcement agency along with other information.

The new forms that employers should be familiar with and use effective January 1, 2013:

1.  A Summary of Your Rights under the FCRA (Appendix K)

2.  Remedying the Effects of Identity Theft (Appendix I) - (not linked -- sent by CFPB to persons whose credit may have been impacted by identity theft)

3.  Notice to Furnishers of Information: Obligations of Furnishers under the FCRA (Appendix M)

4.  Notice to Users of Consumer Reports: Obligations of Users under the FCRA (Appendix N)

Negligently or willfully failing to comply with the FCRA's requirements can subject employers to claims by applicants or employees as well as actual damages and attorneys' fees.  Willful failure to comply with requirements can lead to statutory damages ranging from $100 to $1,000 per violation, plus attorneys' fees, and punitive damages.

If you would like assistance navigating FCRA or related issues, contact Brigid E. Heid or your attorney at Carlile Patchen & Murphy LLP at 614.228.6135.

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