Here is what I typically look for in Background Investigation – Employment cases where an employer terminates an employee or refuses to consider or hire an applicant for employment based on a background check or credit report. The Fair Credit Reporting Act, a Federal law, has certain requirements that an employer and consumer reporting agency must satisfy if a consumer report of any type is used in the employment setting to take any type of adverse action against an employee or applicant.
- Did the employer provide a disclosure of its intent to get a background/consumer/credit report prior to doing so?
- Did the disclosure document consist only of the disclosure, with the exception of also providing for the signature on an authorization by the client (no releases, drug test waivers, indemnity provisions, etc., included with the disclosure/authorization)?
- Did the employer get the client’s written authorization to obtain a background/consumer/credit report?
- Did the employer obtain a report from a source that charged a fee or for other compensation of some form?
- If the employer took an adverse action based in whole or in part on the report, did it provide advance notice of at least 5 days of its intent to take an adverse action and, with the advance notice, provide the client with a copy of the report and FTC summary of rights under the FCRA?
- If the report included public record information, did the reporting agency send the client a letter with a copy of the report, summary of rights and the name and date of the employer to whom it sent the report?
- What damages are proximately caused by any of the above requirements?
- Whether a consumer report was used may require separate analysis depending on the circumstances. The definition of a consumer report is pretty broad though.
The standards of liability are negligence or willful. Willful includes reckless disregard of someone’s rights.
The act permits recovery of actual damages which includes any economic loss and emotional distress according to the standard in your jurisdiction. If there are no actual damages, the act still provides for a court to award statutory damages between $100-$1000 if the violation was willful. If a willful violation exists, punitive damages are also available. If you prove either a negligent or a willful violation, the act provides for recovery of attorney’s fees and litigation expenses.