News & Insights

HR Best PracticesHiring and On-boardingFeaturedSeptember 30, 2012by Stanton LawNew FCRA Forms Mandated by 1/1/13

Never content with the current regulatory burden upon employers, our estimable federal government has decided that the existing Fair Credit Reporting Act (“FCRA”) regulations and forms are insufficiently onerous.   Accordingly, one of Washington’s latest bureaucracies, the Consumer Financial Protection Board (“CFPB,” the agency that has assumed FCRA-enforcement responsibilities from the Federal Trade Commission), has issued new regulations that will, among other things, require employers to begin using revised FCRA forms by January 1, 2013.  America’s consumers unquestionably feel safer and better protected even as this post is being written.

The new regulations modify three common FCRA forms.  Most notably for employers, the regulations revise the Summary of Consumer Rights under the FCRA.  The Summary is the standard notice employers and consumer reporting agencies (“CRAs,” the companies retained by employers to conduct background checks) must provide employees and applicants in a variety of situations, such as prior to an investigative consumer report or when providing a pre-adverse action notice.  A copy of the new form, which is practically indistinguishable from the old form, can be obtained here:  12 C.F.R. 1022, Appx. K.  Even if you can’t tell the difference, you still have to redo your FCRA process and use the new one.

The new regulations also modify the forms that CRAs must provide to their clients (e.g., employers) and to certain furnishers of information.  These forms, in case you’re for some reason interested, are here:  12 C.F.R 1022, Appxs. M and N.

I recommend that every employer obtain from each of their applicants FCRA-authorization to run a background check and, in fact, run a background check on each of their applicants before the applicant is hired.  Although the Equal Employment Opportunity Commission (“EEOC”) and several state agencies have lately come to look dimly upon employers’ use of certain kinds of background check information, verifying that an applicant is who they say they are and don’t have easily discovered skeletons in their closet is an easy way to avoid bigger hassles down the road.  Indeed, in each of the past two weeks, I’ve had to counsel employers on firing problem employees whom they would have never hired if they had the information available from a simple background screen.

The FCRA does not, in and of itself, prevent an employer from taking any adverse employment action (such as failing to hire), but simply provides the protocol to run a background check and the information that must be provided to an applicant or employee against whom action is taken.  Just as it is foolish (in my opinion) for employers not to run checks, it is equally foolish for employers to run background checks without complying with the FCRA’s (and now the CFPB’s) mandates.

For assistance with FCRA compliance, or any other best practice for not hiring bozos, axe-murderers, or other ne’re-do-wells,  please give me a call.  Not hiring the next person you have to fire always makes more sense, and I can help you do that legally.  404.881.1288 | [email protected]