Make Sure Your Employer Follows the Law for Background Checks

Use these links to jump to different sections:

• Get Ahead of Potential Negative Information
• Employer Obligations for Background Check
• What if Something Bad Turns up in the Background Check?
• What if the Information Was Inaccurate?

If you’re on the job hunt, you can expect that your potential employer may do a employment background check on you. The Fair Credit Reporting Act (FCRA) authorizes employers to obtain and use background or consumer reports for employment decisions. Employers can obtain reports on job applicants as well as current employees. But those employers must meet certain obligations in so doing, and you may want to know them in case they overstep their bounds.

Get Ahead of Potential Negative Information

If you will be subject to a background check, ensure there are no surprises. You can obtain a free copy of your credit report from each credit reporting agency (CRA) here, and review your current credit files. While there, you can correct any inaccurate information. It may also be worth your time to explore expunging and/or sealing criminal records, and resolve civil judgments, if possible.

Employer Obligations for Background Check

The FCRA requires employers follow certain steps before it is allowed to obtain and use a credit history report for employment reasons. The first step is to provide a disclosure to the prospective employee that a background screening is being obtained for employment purposes. Under the FCRA, this disclosure must be:

• In writing
• Clear and conspicuous
• In a document that consists solely of the disclosure

The employer must obtain the consumer’s written authorization to pull the report, and it is within the employee’s right to refuse to sign the authorization. But if you do, keep in mind that the employer could deny employment.

What if Something Bad Turns up in the Background Check?

The employer must provide notice before it takes adverse action based on information found in the report. This “pre-adverse action notice” must include:

• One copy of applicant’s consumer report
• A copy of applicant’s summary of rights under the FCRA

The employee should receive this notice approximately five business days before the adverse action is taken. The purpose of this notice is to allow the employee to verify the information is accurate, or explain the negative information to the employer. The employer must provide one more form of notice to the employee after the adverse decision has been made—the “post-adverse action notice.” This notice includes:

• the name and contact information of the CRA that provided the background check on which the adverse employment decision was based
• a statement advising the individual that the CRA did not make the adverse employment decision and therefore cannot provide any reasons why the adverse action was taken
• notification that the applicant or employee is entitled to receive a free copy of the background check or consumer report on which the adverse action was based within a 60-day period.

What if the Information Was Inaccurate?

The CRAs and furnishers of sensitive information also have obligations, the most important being that it has taken certain steps to ensure the information is accurate. If the information within the report is not accurate, the employee should promptly inform the credit reporting agency and dispute the inaccurate information, requesting it be removed or modified. If the CRA and the furnishers of the negative information agree, the CRA should make the changes requested. If the employee requests, the CRA will provide correct copies of the employee’s credit report to anyone who had requested the employee’s credit reports within the previous six months. If the CRA denies to make any changes, the employee may be left with no other recourse than a lawsuit against the CRA. If that is the case, employees should discuss their options with an experienced New Jersey consumer law attorney who specializes in FCRA claims. For more information on this area of law, see our overview of consumer law.