The growing need for employers to perform their proper due-diligence in the hiring process created the need for legislation to protect the rights of applicants and as a guideline of best practices” for employers. This delicate dance between an employer’s right to know and the applicants’ rights led to the creation and updating of the Fair Credit Reporting Act (FCRA). This federal legislation is not limited to credit reports but also covers public records, criminal records, sex offender registration, driving records, and other various information regarding employment or housing suitability. While a being a far-reaching and large piece of legislation, the FCRA can be condensed into four significant steps for the hiring process:


Step 1: Employer Certifications

Step 2: Disclosure and Authorization

Step 3: Adverse Action Letters

Step 4: Notice to Applicant after Adverse Action



Step 1: Employer Certifications

Prior to providing a consumer report, employers must first certify in writing to the CRA that they will follow the FCRA rules concerning disclosure, authorization, notice and adverse action notices, and that they will not use information in violation of any state or federal discrimination law, according to Rosen.


Step 2: Disclosure and Authorization

Before obtaining any type of consumer report, Rosen says an employer must:

Make a clear and conspicuous disclaimer to the consumer, in writing, in a standalone document, that a consumer report may be obtained for employment purposes.
Obtain the consumer’s signed authorization to obtain the consumer report.

Employers may combine the disclosure and the request for authorization, but not as part of the employment application, as it should be a free-standing document.



Step 3: Adverse Action Letters

Prior to taking adverse action based in whole or in part on a consumer report, employers must provide applicants with copies of the consumer report and the document “A Summary of Your Rights Under the Fair Credit Reporting Act.”

Employers must provide the consumer the same report the employer receives.
Provide “a reasonable period of time” to allow the applicant to challenge the accuracy of the report.

If the applicant disputes the content of the report this time period allows the employer/background screening provider to review the many possibilities of mistakes that could include stolen or mistaken identity, incorrect or confusing records, or that the applicant did not know about the negative record. This is the time to correct these issues prior to a final hiring decision being made.


Step 4: Notice to Consumer after Adverse Action

If the adverse action becomes final and the non-hiring decision has been made, a second letter is required under the FCRA that must provide the following:

Notice of the adverse action.
The name, address, and telephone number of the consumer reporting agency that provided the consumer report.
A statement that the CRA did not make the adverse decision and cannot provide the consumer with the specific reasons supporting the action.
Notice of the consumer’s right to obtain a free copy of the consumer report.
Notice of the consumer’s right to dispute the accuracy or completeness of the information contained in the consumer report.

Compliance is not optional and the penalties can be steep. It is up to the employer to closely follow the requirements of the FCRA to insure that the legal rights of the applicant are not infringed upon. HireSafe works closely with their clients providing guidance and the required compliance and disclosure forms at both the state and federal level.