Pre-employment Screening: Background Checks and your FCRA Rights

You're Hired, But?

Picture it like this. You have made it past the other job candidates to the first and second interviews, you've done well and the magic call comes offering you the job. You're just about to start celebrating, when you hear the words "subject to a background check including credit check." and now your heart sinks. I know, because I have been there. In the late 1990s, I found myself explaining the sins of my early twenties to the President of the company so that I could get the job. It was not a fun experience. Fortunately, I had applied for a job that did not involve handling cash and, therefore, my credit indiscretions were put aside. It's not always that easy.

Consumer Report

Under the FCRA, a consumer report is not limited to a credit check. It includes any report that is used in the employment process. It can include such items as a criminal background check, education verification and/or a driving record check. Employers use these items for several reasons including verifying the data, evaluating your character and avoiding future liability. For example, if you are applying for a job as a delivery driver and your driving record shows multiple speeding tickets, the company may not want to take on the liability of your driving one of its vehicles.

Can the Prospective Employer Check Your Background?

The short answer is yes, but with a few rules along the way. Here's a brief outline of the steps that must be followed.

• First and foremost, the employer must tell you that they are going to use a consumer report as part of their selection process AND must get your authorization to do so in writing.
• Next, if the report does show anything that may result in a negative decision, they must notify you of the possibility of a negative outcome, provide a copy of the report and an FTC document titled "Your Rights Under the Fair Credit Reporting Act".
• Finally, if they do not select you because of the report, they must notify you that the action was taken, the name of the agency that provided the report and your rights.

Now, my experience on both sides of the hiring process has been this. Once a report comes back that causes questions, the employer will typically give you the required documents and call you to ask for more information. Depending on the reasons for the negative information and the requirements of the position, you may still be offered the job. If it is a position that requires you handle a great deal of cash and your financial situation is seen as "desperate", you probably should start exploring other options. If however, the poor credit can be explained by items like prior loss of a job unexpectedly, health issues and/or a divorce and you've had a good track record since that time, the company may choose to continue to move forward. This would be the case for all types of information received.

Can Your Current Employer Check Your Background?

Again, the short answer is yes. However, your employer is required to provide you with notice that this may occur during your employment but is not required to get your permission each time. If the information contained in the report causes them to withhold a promotion or take other adverse action, then the requirements listed above would come into play.

Final Thoughts

In today's world, you have to treat the job search process much like the loan process. Get a copy of your credit report in advance so that you won't have any surprises. You are eligible to receive a free copy of your credit report once per year. And don't lie on the application when it comes to criminal offenses. As a person who has been on both sides of the hiring process, I can assure you that honesty pays.

If you would like to read more about other laws and how they affect you at work, please click here to visit my other labor law hubs.