Driving Record and Consumer Report Compliance

Compliance ChecklistThere are legal consequences for employers who don’t comply with the FCRA, whether they fail to get an applicant’s okay before getting a copy of their credit or other background report, fail to provide the appropriate disclosures in a timely way, or fail to provide adverse action notices to unsuccessful job applicants.

If you think an employer has violated the FCRA, report it to the FTC (now the CFPB), because the law allows the FTC (now the CFPB), other federal agencies, and states to sue employers who don’t comply with the law’s provisions. The FCRA also allows people to sue employers in state or federal court for certain violations.


4 Steps to Comply with the FCRA

A Consumer Report includes Criminal Records, Driving Records, Credit Reports, Civil Records, Employment and Education Verification, Reference checks and any other information obtained by a Consumer Reporting Agency. By following the FCRA, an applicant’s privacy rights are protected. When orderding a driving record and/or a background check from a Consumer Reporting Agency, both the employer and the CRA must follow these four steps. Failure to do so can result in substantial legal exposures, including fines, damages, punitive damages and attorneys fees.

Step 1
(FCRA Section 604)
An Employer must certify to the Consumer Reporting Agency that it will follow the FCRA

Prior to supplying a Consumer Report, an employer must certify to the Consumer Reporting Agency (CRA), that the employer will follow all the steps set forth in the Fair Credit Reporting Act. These include:

  • That the employer will use the information for employment purposes only.
  • That the employer will not use the information in violation of any federal or state equal opportunity law.
  • That the employer will obtain all the necessary disclosures and consent/release forms.
  • That the employer will give the appropriate notices in the event that an adverse action is taken against an applicant based in whole or in part on the contents of the Consumer Report.
Step 2
An Employer must obtain a Signed Release and a separate Disclosure form from a job applicant before obtaining a Consumer Report (FCRA Sections 604 and 606)

Before obtaining a consumer report from a Consumer Reporting Agency, the employer must obtain signed consent release form from the applicant and provide the applicant with a clear and conspicuous written disclosure that a background report may be requested. The disclosure must be provided in a standalone document to prevent it from being buried in an employment application.

Release and Disclosure Forms

Sample documents should NOT be construed as legal advice, guidance or counsel. Employers should consult their own attorney about their compliance responsibilities under the FCRA and applicable state law.   TR Information Services expressly disclaims any warranties or responsibility or damages associated with or arising out of information provided. Employers seeking credit reports must provide additional notices pursuant to state law.

Step 3

Adverse Action White Paper

If adverse action is intended or may be intended as a result (based in whole or in partof a Consumer Report, then the applicant is entitled to certain documents (FCRA Section 604)

**** VERY INPORTANT ****
*** DO NOT MAKE A HIRING DECISION BEFORE PROVIDING THESE DOCUMENTS TO THE APPLICANT. ***
Before taking the adverse action (Deciding NOT to hire your applicant), the employer must provide the following information to the applicant:

If an employer denies a job applicant, terminates an employee, rescinds a job offer, or denies a promotion based on the results of a background check and/or a driving record, it is considered and adverse action. Under federal law there are required steps that must be followed in order to be in compliance with the Fair Credit Reporting Act (FCRA).

There are two notice requirements under the FCRA

I. The Pre-Adverse Action Letter

This is called a Pre-Adverse Action letter, since it must be sent before the adverse action is taken. In other words, if an employer feels that the information contained in a background check and/or a driving record report may impact the hiring decision, then at that time the employer must send the Pre-Adverse Action letter. The purpose of this process is to give the applicant an opportunity to dispute the accuracy of what was reported. Section 604 of the FCRA requires that before taking any adverse action employers provide to the applicant with:

The purpose of these documents is to give an applicant the opportunity to see the report that contains the information that is being used against them. If the report is inaccurate or incomplete, the applicant then has the opportunity to contact the CRA to dispute or explain what is in the report. Otherwise, applicants may be denied employment without ever knowing they were the victims of inaccurate or incomplete data.

The FCRA is silent on how long employer must wait, but the best practice is to give applicant a meaningful opportunity to review, reflect and object. A minimum is five (5) business days suggested.

II. The Adverse Action Letter

The second notice must be sent after the employer decides to take adverse action (not hire the applicant). In the Adverse Action letter the employer must notify the consumer that adverse action has been taken based on a consumer report, and include in that disclosure the following:

Adverse Action Letter – Sample

  1. The name, address, and phone number of the consumer reporting agency that furnished the report.
  2. A statement that the consumer reporting agency did not decide to take the adverse action and is unable to provide the consumer with specific reasons for the action.
  3. A notice of a consumer’s rights to obtain a free copy of his or her report from the consumer reporting agency within 60 days.
  4. The individual has the right to dispute the accuracy or completeness of any information in the report.” FCRA §615.
Step 4
Notice must be give to an applicant after an adverse action (FCRA sec. 615)

 

If after sending out the documents required in Step 3, the employer intends to make the decision final, the employer must take one more step. The employer must send the applicant a Notice of Adverse Action informing the job applicant that the employer has made a final decision, along with another copy of the form “Summary of Your Rights under the Fair Credit Reporting Act.

The purpose of this second notice is to give job applicants the maximum opportunity to correct any incomplete or inaccurate reports that could affect their chances of employment.

TR Information Services does not own the information being reported in a consumer report. We use several databases and court researchers to compile the consumer report. We do however take the accuracy of the information very seriously. In the event that your applicant feels that the information reported on the background check is inaccurate, please fill out the Reinvestigation/Dispute Form
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