Many employers elect to consider the backgrounds of applicants when making hiring decisions, such as investigating an applicant’s work history, education, criminal record, and financial history. We note that employers must be careful to comply with state and federal laws that protect applicants from discrimination, but that is not the subject of this discussion.
When an employer runs a background check through an outside company, the employer and the company must comply with the Fair Credit Reporting Act (FCRA), as well as state and local laws that are beyond the scope of this article. As part of the compliance process, notices must be given to the applicant to explain his or her rights under the FCRA.
These FCRA rights include the right to obtain a copy of a consumer report (the term for background checks under the FCRA), the frequency and circumstances under which an applicant is entitled to receive a free consumer report, the right to dispute information in a consumer’s report, and the right to obtain a credit score. The Consumer Financial Protection Bureau (CFPB) makes model notices available to facilitate compliance with the FCRA requirements.
In May 2018, Congress passed legislation designed to assist consumers who are affected by data breaches. The new law requires credit reporting bureaus to provide consumers with fraud alerts and national security freezes and freeze releases. In addition, the new law amended the FCRA to require employers and background check companies to modify the notices provided to affected job applicants to include a notice regarding the new security freeze rights.
The CFPB has issued interim regulations covering the updated disclosure requirements, along with an updated “Summary of Your Rights under the Fair Credit Reporting Act.” The updated model form incorporates the new notice requirements. A copy of the updated model form may be found here: https://files.consumerfinance.gov/f/documents/bcfp_consumer-rights-summary_2018-09.docx
As an alternative to the updated model form, the interim regulations allow employers to use a combination of the prior model disclosure forms (issued in 2012), along with a summary of the new security freeze rights. The language regarding the new security freeze rights must be on a separate page accompanying the model disclosure form.
These updated notice requirements are effective now, so employers are urged to update their disclosure or confirm that their background check companies have done so.