EMPLOYMENT LAW ALERT!!! EMPLOYERS USING BACKGROUND CHECKS MUST TAKE IMMEDIATE ACTION UNDER NEW CHANGES TO THE FAIR CREDIT REPORTING ACT

Effective immediately, employers who perform background checks on applicants or employees using third party consumer reporting agencies (the reports being generally known as “consumer reports”) need to update their background check paperwork under the Fair Credit Reporting Act Reporting Act (“FCRA”), by replacing their old “Summary of Your Rights Under the Fair Credit Reporting Act.” The new version of the form includes information regarding an individual’s right to obtain a security freeze or fraud alert on his or her credit report. Under newly passed legislation, if an employee initiates a security freeze, it restricts prospective lenders from accessing their credit reports and prevents others from opening accounts in the consumer’s name.

          The FCRA applies to employers who obtain a “consumer report” or background check on an employee or applicant. A “consumer report” contains information on an individual’s credit worthiness or credit standing, but can also include information about a person’s character, general reputation, personal characteristics, and/or mode of living, including information concerning the person’s criminal history. Several states, including Illinois, have restrictions on what information and for what purposes, a “consumer report” may be used in the employment setting.

            Employers are required by the FCRA to provide a “Summary of Consumers Rights” to an applicant or employee prior to obtaining a “consumer report” which (1) must disclose to the person  that the employer is procuring a consumer report and it may use the information in the report for decisions related to consideration for employment or continued employment; (2) receive written permission form the employee or applicant; and (3) provide the employee or applicant with a Summary of Consumer Rights.

            Under the FCRA, the summary of rights must be given to an employee or applicant BEFORE taking any adverse action, such as rejecting the applicant for employment, or deciding to terminate or not promote a current employee, based on a credit report covered by the FCRA. Failure to provide the disclosure form as required when taking action based on a background check, can expose an employer to potentially significant damages.

            Employers that use consumer reports for making hiring or other employment related decisions, should ensure that they are using the most up to date FCRA forms. Additionally, before instituting any background check process, employers should consult with experienced legal counsel to ensure that their process is compliant with all federal and state consumer reporting laws.

With over 34 years’ experience in advising employers and employees on workplace issues, let Boznos Law work with you to ensure you are ready to meet the challenges posed by the changes to the employment laws. Call Bill Boznos today at (630) 375-1958 or contact us at www.boznoslawoffice.com/contact-us through our website.          

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