The Consumer Financial Protection Bureau (“CFPB”) has issued a new notice to be issued to applicants and employees who will be subject to background checks. Employers should begin using the new notice, entitled “A Summary of Your Rights Under the Fair Credit Reporting Act” (“FCRA”) immediately.

The FCRA addresses the manner by which businesses may conduct background checks as well as the rights of an individual whose application or employment is affected by a negative result. Businesses who contract with background or credit check companies to do the legwork often rely on those vendors to provide the proper forms and to give the required information to applicants. It would be wise, however, for the business itself to be familiar with the legal requirements at play.

Employers are required to give clear notices to affected employees, and the Summary of Rights must be provided before any adverse employment decision is made. The employee is entitled to, among other things, the following information:

  • Whether information obtained in the background or credit check was used against him or her;
  • Access to a free copy of the report which is the basis of the adverse action;
  • Notification of a credit score if credit information is used;
  • The right to dispute incomplete or inaccurate information; and
  • Limitation of the information in the report to those with a valid need.

Damages for violations of FCRA can be significant. For that reason employers should be sure not only that the correct forms are being used, but also that the information obtained is being used appropriately and secured properly. Best practice suggests maintaining information obtained through background checks separate from personnel files in a secure location. For more information, visit