Employers May Access Your Personal Credit Report |
|
Employers must tell the personal credit
reporting agency why the information is being requested, and certify that the information will not be used for any other purpose. In case information is obtained under false pretense, criminal penalties might be imposed. The affected consumer can also sue the employer for actual and punitive damages and attorney's fees for having willfully failed to comply with this requirement. Personal credit reports can be of two types: consumer personal credit report and investigative consumer report. The first is about a consumer's creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living which is used in part for the purpose of serving as a factor in establishing the consumer's eligibility for employment purposes. In the second information on the consumer's character, general reputation, personal characteristics or mode of living is obtained through personal interviews with neighbors, friends or associates of the consumer reported on or with others with whom he is acquainted or who may have knowledge concerning any such items of information. If employment is denied based on a personal credit report, the employer must tell this to the applicant along with the name and address of the agency making the personal credit report. The employer must inform the applicant which information on the report prompted the action so that the applicant can contact the reporting agency and correct any negative information. Employers should preferably give this disclosure in writing. If an employer rejects an applicant solely on the basis of personal credit report history, the applicant can correct the negative credit information and could reapply, assuming to be now qualified for the job. A poor credit reference may not be the only factor for rejection and as such the FCRA disclosure should be precise and indicate that the credit history was not the only factoring in assessing the applicant's qualifications. For the more comprehensive investigative consumer personal credit report, an employer must make certain disclosures to the applicant within three days of when the employer requests this personal credit report. This special disclosure obligation exists for the investigative consume personal credit report, regardless of whether the information is actually used. The employer must inform the applicant that a consumer investigative personal credit report was requested; the nature and scope of the investigation requested, which could include the types of questions asked and the number and types of persons interviewed; and the fact that the applicant has a right to request, within a reasonable period of time, a complete and accurate description of the nature and scope of the investigation. An employer must respond to an applicant's request for more information within five days after this request has been received. In all cases, investigative consumer personal credit report disclosures must be clear, conspicuous and in writing. They also must be in a form that the applicant can retain. Consequently, if these special personal credit reports are requested, the special disclosure must be given to the applicant at the time of application. Disclosures of personal credit report may also be included in the employment application, provided, as with the separate disclosure notice, it is clear, conspicuous and not obstructed by other language. The purpose of this requirement is to make certain that the applicant will read the disclosure. Also, a copy of the employment application, with the disclosure, must be given to the applicant. Penalties for failing to comply with FCRA's disclosure requirements are enormous. The employer's failure to comply could result in liability for actual damages, which can include damages for humiliation and mental distress and injury to reputation and creditworthiness. The personal credit report applicant might also recover the cost of bringing his or her action and reasonable attorney's fees. In cases in which willful violation of FCRA can be proved, the employer could be liable for the actual damages sustained by the applicant, punitive damages, the cost of bringing the action, plus reasonable attorney's fees. Damages could be horrendous in a class action case. Fortunately, the act affords the employer a safe harbor in the event a required disclosure is not made. According to FCRA, an employer will not be liable for using consumer personal credit reports improperly, if it can show that at the time of the alleged violation, it maintained reasonable procedures to assure compliance with the act. The employer must prove, however, that the procedures were in effect and were being used at the time of the alleged violation and that the lack of disclosure was a momentary slip-up. In summary, if consumer personal credit reports are used when making employment decisions, the employer is obligated to make disclosures. The employer is also required to make special disclosures when a consumer investigative personal credit report is requested, even if the personal credit report is not used. Failure to make these mandatory disclosures could subject the employer to significant liability, particularly if the failure to comply is found to be willful. |
