Background Checks and Federal Law

Do you do background checks on prospective employees?

If so, don’t forget that you must comply with the Federal Fair Credit Reporting Act (FCRA) and any similar state laws. The FCRA requires an employer to obtain a written authorization—on a sheet of paper separate from the application—and provide appropriate notices to the applicant. If the employer makes a decision to reject the applicant because of what is on the report, then the employer must provide a notice to the applicant prior to taking the adverse action and provide a separate notice after taking the action. The notice must provide the applicant with information on how to obtain a copy of the report. An employer that fails to comply with the FCRA could be liable for civil penalties.

Check with your state labor department for more information.

Source: Epstein, Becker & Green, November 10, 1998, New York.