A Summary Of The Federal Fair Credit Reporting Act (fcra) For Employers And Employees

In order to avoid expensive lawsuits and heavy government fines

, it's crucial for employers to follow laws concerning running a background check. Company leaders must have a basic understanding of the main piece of background check service legislation, the Federal Fair Credit Reporting Act (FCRA). Additionally, workers should empower themselves by understanding the individual rights outlined in FCRA legislation. Below, you'll find an introductory summary of the FCRA statutes, intended for employers and employees.

Background on the Federal Fair Credit Reporting Act (FCRA)

Since the formation of the first Credit Reporting Agencies (CRAs) in 1899, every businesses has had the opportunity to research employees' history through a background check company. The Federal Fair Credit Reporting Act was made a law in 1970, after investigations revealed the need to regulate background check service providers. The FCRA was intended to prevent CRAs from falsifying information, and from gathering lifestyle information such as cleanliness, sexual preference, etc. It also prevents CRAs from sharing their findings with unauthorized entities, such as local law enforcement.

What Employers and Employees Need to Know About The Federal Fair Credit Reporting Act

Both workers and employers have good motivation for understanding FCRA. Employees should understand their rights under the statute, and employers must carefully follow the letter of the law to avoid hefty fines.

Every American citizen should appreciate his or her right to access a background check company's profile of his or her character. Anyone can order a copy of her or his credit report (free annually), visit the government-authorized website annualcreditreport.com. Should you find errors, the FCRA empowers you to dispute the findings of the background check company. Each the background check service must be able to prove the accuracy of their reports. One more thing each American adult should know: CRAs can't hold onto negative information indefinitely, according to FCRA standards. A late payment can't be kept on a person's credit report for more than seven years, while bankruptcies appear for the duration of ten years.

Just as it's smart be careful about one's personal credit reports, it's wise for employers to be cautious, recognizing the incredible impact a negative background check can have. An investigation carried out by a background check service could influence a person's employability for years. Moreover, it will be challenging to attract new workers if questionable background check tactics tarnish your reputation as a fair employer. The easiest way to protect yourself and your company is to follow FCRA standards. Here are a few basic tenets ever employer should know; follow-up with your lawyer for more detailed advice.

1.Follow FCRA rules on proper disposal of credit information. Read section 628 to learn more.

2.Inform individuals of Negative Outcomes Influenced by CRA Findings. Should a background check company's findings cause you to reject an applicant, FCRA rules require you to tell the unlucky individual in writing. Include contact information for the responsible credit agency, along with information on each individual's right to access and dispute background reports.

3.Stay Away from any Background Check Service that Doesn't Follow FCRA Standards. Today, there are dozens of online background check companies claiming they can tell you "anything about anyone immediately." Not all of these groups follow FCRA rules. To protect your company's reputation for honesty, be sure you choose a background check company that adheres to FCRA guidelines.

by: Thomas Winthrop

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