Employers that use background checks, credit reports, etc. in making employment decisions are required to comply with the Fair Credit Reporting Act (FCRA). That Act obligates employers to inform applicants and employees if such reports (which are considered “consumer reports”) may be used, to provide certain disclosures, and to obtain written authorization before securing and using the reports. If a “consumer report” will be the basis for “adverse action” such as a refusal to hire or a discharge, the employer must also provide a “pre-adverse action” notice to the applicant or employee and follow up with an “adverse action” notice containing specific information required by the Act.
Under the Dodd-Frank Act adopted in 2010, responsibility for enforcement of the FCRA has now moved from the Federal Trade Commission to the new Consumer Financial Protection Bureau (CFPB). Because of this change, every employer who uses “consumer reports” in employment decisions (as well as every business that uses “consumer reports” in extending credit or issuing insurance) must update all of their FCRA notice forms. The changes must reflect changes to the CFPB’s new Summary of Rights Form. The required changes are relatively minor, but they must be made before January 1, 2013.