FCRA

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Employers who conduct background checks on applicants or employees must comply with the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq. Among other things, the FCRA requires employers who procure criminal background reports (“consumer reports”) to provide applicants and employees with a Summary of Rights form as prepared by the Consumer Financial Protection Bureau (CFPB) when providing them with the FCRA-required pre-adverse action notices. See 15 U.S.C. § 1681b(b)(3)(A)(ii).
Continue Reading Compliance Update for U.S. Employers Conducting Criminal Background Checks in the Hiring Process

The Federal Reserve anticipates an approximate two percent reduction in unemployment by June 2021, envisioning rapid mass-hiring by employers once governments lift the more stifling COVID-19 restrictions.  Businesses requiring pre-employment background checks may be uniquely exposed to liability under the Fair Credit Reporting Act if minor mistakes are amplified by mass-hiring events.
Continue Reading Two Recent Ninth Circuit Cases Provide Guidance on FCRA Disclosure and Authorization Form Requirements

The Department of Labor has released a new set of “Questions and Answers” for employers under the Families First Coronavirus Response Act.  The guidance supplements the temporary rule issued by DOL in April; final regulations are still forthcoming.
Continue Reading DOL Updates Guidance on Coronavirus Paid Leave Law, Addresses Business Reopenings

An employer’s obligations under the Fair Credit Reporting Act are triggered when it obtains a “consumer report” from a “consumer reporting agency” for use in making an employment decision. A federal court in the Middle District of Florida is set to rule on a summary judgment motion clarifying whether a business that transmits public records unaltered to a prospective employer is a “consumer reporting agency”.
Continue Reading New Litigation May Further Clarify the FCRA’s Definition of “Consumer Reporting Agency”

For the first time in the Ninth Circuit, the Court of Appeals addressed the issue of whether every class member in a class action lawsuit needs “standing” to recover damages at the final judgment stage, and found in the affirmative.  In Ramirez v. TransUnion LLC, No. 17-17244, 2020 WL 946973 (9th Cir. Feb. 27, 2020), a class of 8,185 consumers brought a class action against the credit reporting agency TransUnion LLC pursuant to the Fair Credit Reporting Act, alleging that TransUnion, knowing that its practice was unlawful, incorrectly placed terrorist alerts on the front page of consumers’ credit reports and later sent the consumers misleading and incomplete disclosures about the alerts and how to remove them. …
Continue Reading For the First Time in the Ninth Circuit, the Court Finds That All Class Members in a Class Action Must Have Standing to Recover Damages

On November 22, 2019, the federal Consumer Financial Protection Bureau filed a complaint in the U.S. District Court for the Southern District of New York against Sterling Infosystems, Inc. regarding allegations that it violated the Fair Credit Reporting Act in providing criminal background checks to employers.  Sterling is a “consumer reporting agency” as defined by the FCRA, which provides background check results to employers when requested.
Continue Reading Background Check Vendors Beware: the CFPB’s Authority to Enforce the FCRA Applies to You Too

On July 11, 2019, the House Financial Services Committee, led by Chairwoman Maxine Waters (D-CA), considered The Restricting Use of Credit Checks For Employment Decisions Act as one of four bills designed to reform the Fair Credit Reporting Act and the credit reporting system.…

Continue Reading Why Employment Credit Checks May Soon be a Thing of the Past

Employers failing to strictly comply with FCRA requirements in conducting background checks continue to face expensive consequences.  On November 16, 2018, the United States District Court for the Southern District of California approved a $1.2 million settlement of a class action lawsuit alleging violations of the FCRA filed against the popular pet supplies chain Petco.
Continue Reading Failing to Properly Conduct Background Checks Continues To Be a Million-Dollar Mistake