Reducing Risk of Lawsuits Over Disclosure Forms

Notice/Disclosure, Authorization/Consent & Certification The End-User of the Report (Employer/Prospective Employer) must provide prior written disclosure to the candidate/employee that a consumer report is procured for employment purposes [FCRA Section 604(b) (1)]. This is a mandatory step for the employer to take. Additionally, the candidate/employee must pre-authorize in writing the procurement of the consumer report [FCRA Section 604(b) (1)]. This is also a mandatory step for the employer to take. Please note that it would be advisable for the end-user of the report to obtain a broader type of authorization for requesting consumer reports for employment purposes that includes the screening of (i) the candidate for a position, (ii) the employee during the term of his/her employment with the employer or the considered defacto employer to ensure continued compliance with the employer’s requirements, and/or (iii) the employee for the purpose of a promotion , assignment, or reassignment during the term of his/her employment with the employer. The specific section of the FCRA on the subject matter reads as follows: § 604. Permissible purposes of consumer reports [15 U.S.C. § 1681b]

(b) Conditions for Furnishing and Using Consumer Reports for Employment Purposes.

(1) Certification from user. A consumer reporting agency may furnish a consumer report for employment purposes only if

(A) the person who obtains such report from the agency certifies to the agency that

(i) the person has complied with paragraph (2) with respect to the consumer report (Disclosure to Consumer) , and the person will comply with paragraph (3) with respect to the consumer report if paragraph (3) becomes applicable (Conditions on use for Adverse Action); and

(ii) information from the consumer report will not be used in violation of any applicable Federal or State equal employment opportunity law or regulation; and

(B) the consumer reporting agency provides with the report, or has previously provided, a summary of the consumer’s rights under this title, as prescribed by the Federal Trade Commission under section 609(c)(3) [§ 1681g].

(2) Disclosure to Consumer.

(A) In general. Except as provided in subparagraph (B), a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless–

(i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and

(ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.

(3) Conditions on use for adverse actions.

(A) In general. Except as provided in subparagraph (B), in using a consumer report for employment purposes, before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates—

(i) a copy of the report; and

(ii) a description in writing of the rights of the consumer under this title,

Important: Note the difference in verb tense used in the statute as the FTC’s informal position on the subject matter and a recent court case settled out of court indicate that the affirmation on the use for Adverse Action cannot be made retroactively in a blanket certification by the employer and needs to be made by the End-User each and every time a consumer report is requested for employment purposes.

At ClearStar, we are committed to your success. An important part of your employment screening program involves compliance with various laws and regulations, which is why we are providing information regarding screening requirements in certain countries, region, etc. While we are happy to provide you with this information, it is your responsibility to comply with applicable laws and to understand how such information pertains to your employment screening program. The foregoing information is not offered as legal advice but is instead offered for informational purposes. ClearStar is not a law firm and does not offer legal advice and this communication does not form an attorney client relationship. The foregoing information is therefore not intended as a substitute for the legal advice of a lawyer knowledgeable of the user’s individual circumstances or to provide legal advice. ClearStar makes no assurances regarding the accuracy, completeness, or utility of the information contained in this publication. Legislative, regulatory and case law developments regularly impact on general research and this area is evolving rapidly. ClearStar expressly disclaim any warranties or responsibility or damages associated with or arising out of the information provided herein.