When an employer uses a third party (a Consumer Reporting Agency) to conduct background checks the information compiled and reported to the employer by the Consumer Reporting Agency is considered a Consumer Report.
The Fair Credit Reporting Act is the federal legislation that sets specific rules and requirements for the use of consumer reports in the employment setting.
Historically the jurisdiction of the Federal Trade Commission, it appears that the newly formed Consumer Finance Protection Bureau will also have a role issuing new rules under the FCRA in the future.
Individual states and even many municipalities may have additional rules that impact the use of consumer reports.
Bottom line?
Background checks are an excellent and cost effective way support your efforts to exercise due diligence and avoid negligent hiring claims.
When using background checks in the employment setting you must follow the letter of the law to avoid creating one type of liability while attempting to mitigate another!
Over the next few days we will examine the FCRA and provide you with simple steps that will help you to examine your current practices and make any necessary changes to insure compliance.
