Work it Out Blog

Why You Should Care About the Fair Credit Reporting Act When Hiring

Feb 16, 2015 by David T. Andrews

Does anyone really care about the Fair Credit Reporting Act (FCRA) requirements on background checks?  Apparently so.  Several large retailers have recently been hit with proposed class action lawsuits seeking millions of dollars for failure to comply with FCRA requirements when hiring new employees. 

The most recent suit alleges that Michaels, a craft supply retailer, failed to provide the “clear and conspicuous” disclosure required by the FCRA.  According to the lawsuit, Michaels did not supply the plaintiffs with a separate document explaining that the company may obtain consumer reports, including credit checks and third-party background screenings.  Specifically, the lawsuit alleges that the disclosures were buried in a long on-line application, which contained “reams of extraneous information.”  Michaels is not alone in having to defend against such a suit.  Discount retailer Dollar General and grocery chain Publix Super Markets have recently agreed to settle similar cases for a combined $11 million.

Obviously, compliance with the FCRA requirements is no mere technicality.  If you are performing background or credit checks for your new hires through third-party services take these steps to be sure you are in compliance:

  • Inform the applicant or employee you might use the information for decisions about his or her employment. This notice must be in writing and in a stand-alone format. The notice can’t be in an employment application.
  • Get the applicant’s or employee’s written permission to do the background check.
  • If you decide not to hire based upon information you learn in the background check, be sure to follow the FCRA’s rules about informing the applicant and give them the opportunity to correct any errors.

For more information or suggested forms for compliance, contact David Andrews at dandrews@dayketterer.com, or your Day Ketterer employment attorney at info@dayketterer.com, or 330-455-0173.

The content of this blog is for informational purposes only and is not intended as legal advice for any purpose. This blog is not intended to present an exhaustive summary of all applicable laws, or to take the place of legal advice.  If you have any questions regarding the law, please contact us for assistance.