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Background Check Credit Reports: Screening Your Employees |
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Background-check credit reports are a popular used by employers during the hiring process. These credit reports
are a relatively common prehiring technique that, unbeknownst to some
employers, can create liability if the appropriate disclosures and notices are not made to potential employees. If your business is one of the many that uses an outside entity or individual to conduct applicant background checks or to investigate current employees, your business must comply with the requirements of the Federal Credit Report Act (FCRA) and the Minnesota Access to Consumer Reports Act (MACRA). The concept of background-check credit reports is gaining ground in the post-9/11 U.S, which has triggered many new concerns among employers. More than one-third of employers said they were more concerned about workplace security after September 11. Today, most companies conduct criminal background checks on potential employees, according to a recent survey. A report from the Society for Human Resource Management shows that 80% of companies said they run a criminal check on applicants before hiring, up nearly 30% from 1996, which makes the practice as common as checking references from previous jobs. It follows that today's employers are also more concerned with checking background credit reports as well. Consumer reports also merit attention here. The FCRA defines a "consumer report" as any written, oral or other communication. In other words, a report made about a person by a consumer reporting agency that bears on the person's "credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living." This includes credit reports and investigative consumer reports for hiring purposes, promotion, reassignment, or retention, among other things. To obtain a consumer report, an employer must first make a clear, conspicuous, written disclosure that notifies the individual that a consumer report may be obtained for employment purposes. The disclosure must be in a document that solely describes the disclosure. In addition, the individual must authorize the procurement of the report in writing. The employer may then request a consumer report for employment purposes by certifying the required disclosure and authorization to the credit agency and affirming that it will not use the report in violation of any equal employment opportunity law. If an employer then wishes to base an adverse employment action even partly on a consumer report, before taking the action, the employer must provide the individual with a copy of the report and a written description of the individual's rights under the FCRA. The credit agency that furnishes the report is required to provide employers with a description of these rights, which the employer usually passes on to the individual. There are many reasons that someone might want to check your credit report. If you are applying for a general or department-store credit card, your credit history will come up. Credit reports will also reveal whether you have declared bankruptcy and when. Moreover, a credit report will detail what property you own and whether there are any liens on your property. It's important not to turn your back on credit reports. It's a great thing if you have a good credit report, but if not, be prepared to face the consequences and get it it good shape today. |
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