Federal Law Protects Privacy Rights of Employees and Job Applicants During Hiring Process

Employers frequently conduct background checks on job applicants by obtaining a consumer report from a credit reporting agency (CRA). In some cases, such as jobs in law enforcement or jobs requiring security clearances, employers are required to conduct background checks for specific issues. Background checks also make sense for certain types of jobs. For example, an employer hiring for a position that involves handling large amounts of money might want to check for excessive problems with debt or past convictions for offenses like fraud or embezzlement. By relying on CRAs to provide background information on job applicants, employers rely on the accuracy of the information they provide. Since these reports are not always accurate, the federal Fair Credit Reporting Act (FCRA) regulates both CRAs and employers. The Federal Trade Commission (FTC) recently offered some guidance to employers regarding FCRA compliance in a blog post. Job applicants might find the FTC’s post useful as a guide to potential warning signs in the job application process.

In the context of employment, the FCRA requires both CRAs and employers to follow specific procedures. An employer must give a job applicant a “clear and conspicuous disclosure…in a document that consists solely of the disclosure” detailing its intent to obtain a consumer report as part of the hiring process, and it must obtain the applicant’s written consent. 15 U.S.C. § 1681b(b)(2). A CRA may not issue a consumer report to an employer unless it obtains a certification from the employer stating that the employer has fulfilled all of its obligations regarding disclosure and consent and that it will comply with all additional requirements under the FCRA. Id. at § 1681b(b)(1).

If an employer decides not to hire an applicant because of information contained in a consumer report, the FCRA requires it to provide a copy of the report to the applicant, along with a written description of the applicant’s legal rights. Id. at §§ 1681b(b)(3), 1681g(c). This allows the applicant to review the information that the employer saw and to use other legal mechanisms provided by the FCRA to correct incorrect or incomplete information. The employer must allow a reasonable amount of time for the applicant to review the report and communicate with the CRA that issued it.

The FTC published a blog post in April 2017 with guidance for employers about their obligations under §§ 1681b(b)(2) and (3). Job applicants may also find this guidance useful. The blog post cautions employers about language in the required disclosure that purports to limit their liability, such as by asking applicants to acknowledge in advance that “hiring decisions are based on legitimate non-discriminatory reasons.” It also advises against “overly broad authorizations” that ask applicants to agree to release information that the FCRA excludes from consumer reports, such as bankruptcy cases from over a decade ago.

If you are involved in a dispute with a current, former, or prospective employer in New Jersey or New York, the experienced and knowledgeable employment attorneys at the Resnick Law Group may be able to help you. Contact us today online, at 973-781-1204, or at (646) 867-7997.

More Blog Posts:

Federal Judge Addresses Injury-in-Fact in New Jersey Employment Class Action, The New Jersey Employment Law Firm Blog, February 2, 2017

New Jersey Lawsuit Accuses Employer of Failing to Make Disclosures Related to Credit Checks, as Required by Federal Law, The New Jersey Employment Law Firm Blog, August 18, 2016

Job Applicant Claims Employment Background Check Violates Federal Law in New Jersey Lawsuit, The New Jersey Employment Law Firm Blog, December 27, 2015

 

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