Employers Use of Background Check Reports and Limitations on Use

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Are you an employer that conducts pre-employment background checks for new hires, or maybe background checks for existing employees for promotion, reassignment or retention purposes? Ever randomly wonder if you can use that report and information in it for a purpose other than employment screening? The short answer is, no.

The FTC recently posted on its blog how to use information in such consumer reports and the fact that an employer or other “user” of consumer reports cannot “double dip.” Meaning, if you receive a “consumer report” (aka a background check report) from a background screening company for employment screening purposes, you cannot use it for a different purpose. If you engage the services of a background screening company make sure to read the Notice to Users of Consumer Reports: Obligations of Users Under the FCRA, which explains employers obligations under the law. Your background screener should provide you with a copy of this notice.

An employer’s obligations include:

  • Having a “permissible purpose” to request a consumer report from a background screening company — for hiring, promotion, retention or reassignment, the “permissible purpose” is employment. Your background screening vendor should ask you to certify your permissible purpose prior to furnishing a report, which is why you may see language about this in the contract as well as other language related to the parties obligations under the Fair Credit Reporting Act (FCRA) (15 U.S.C. § 1681 et seq.).
  • Providing certain disclosures to the job applicant or employee (i) prior to requesting a background check; (ii) when information contained in the report may affect eligibility for employment; and (iii) if an adverse action is going to be taken as a result of information in the report.
  • Providing notice regarding the background investigation and securing the job applicant or employee’s written consent.
  • Properly dispose of these reports, including by burning, pulverizing, shredding or electronically purging the information — for more on proper disposal of reports click here.

Note section III in the Notice to Users of Consumer Reports: Obligations of Users Under the FCRA as it specifically addresses the use of background check reports for employment purposes. The FCRA imposes additional requirements when employers use reports for employment screening purposes.

[reposted courtesy of Montserrat Miller]