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Employment Legislation Update

By Albert J. Solecki, Jr. and Melissa G. Rosenberg

Employers that obtain credit reports or conduct background checks on applicants or current employees must be aware of recent changes to the Fair Credit Reporting Act (FCRA) and amendments made to FCRA by the Fair and Accurate Credit Transactions Act of 2003 (FACTA). FCRA imposes obligations on employers who procure “consumer reports” (defined to include information bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics and mode of living) and/or “investigative consumer credit reports” (which include information obtained from personal interviews with neighbors, friends or associates) from a third-party consumer reporting agency for an employment purpose — including hiring decisions and evaluations of employees for promotion, reassignment or retention.

Specifically, employers must notify an individual in a separate written disclosure that a report may be procured and must receive written authorization from the individual prior to procuring the report. Employers must also certify compliance with the Act to the consumer reporting agency from which reports will be procured. In addition, employers who take adverse action against an applicant/employee based at least in part on a consumer report must provide the applicant/employee with a copy of the report, a notice of intent to take adverse action, and a notification of adverse action.

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