Questions to Ask When An Employer Fires or Terminates an Employee or Rejects an Applicant based on a Background Check

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.

Questions to Ask When An Employer Fires or Terminates an Employee or Rejects an Applicant based on a Background Check

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.

How An Employer Finds Conviction Records

Many employers are now obtaining and using background reports or investigations in the hiring process. These reports typcially contain information obtained from public records which includes criminal arrest and conviction records. If an employer obtains these reports without a proper disclosure of its intent to use such a report or does not obtain the prior written authorization of the consumer or employee to get the rep0rt, the employer may have violated that person’s rights under the Fair Credit Reporting Act, a Federal law. In Wisconsin, the law protects against arrest and conviction record discrimination in employment.

When Employers Can Use Background Reports for Hiring

Background reports is a broad term. But when an employer obtains information about you relating to your lifestyle, mode of living, credit or other financial history, former employers, whether from a consumer reporting agency, a background checking company or some other third party, the report or investigation as it may be called is likely subject to the requirements of the Federal Fair Credit Reporting Act. To obtain or use such a report, the employer must first disclose its intent to use such a report in writing to you in a document that consists solely of this disclosure, though the document may also include a place for you to authorize the report. Secondly, the employer must get your authorization to obtain and use such a report in writing and before it obtains or uses the report. If the employer does not make a legal disclosure or obtain your prior authorization in writing, it is in violation of your consumer rights under the act. If you are not hired or not promoted, or some other adverse action, you may also have damages that are recoverable under the law.

Fired or Not Hired Because of Conviction or Arrest Record

What if you have a conviction or arrest record and an employer in Wisconsin does not hire you because of it? Well, you have rights. In Wisconsin, employers may not discrimination against an employee or applicant because of an arrest or conviction record. The exception is when the conviction substantially relates to the job. Also, if an employer intends to pull a background check on an employee or applicant, it must give notice, disclosure, to the person that it intends to do so and also get written permission from the employee or applicant to do so. Failure to either disclose or get written permission is a violation of Federal law, the Fair Credit Reporting Act. If a background report, even though accurate, is the basis for termination, not getting hired or other adverse employment action, the employer must abide by other notice and disclosure requirements. Most importantly, the employer must give advance notice of the termination, non-hire or other adverse action that it is going to take the action and that a report was used as part of its decision. The advance notice is so the employee or applicant can get a copy of the report, review and correct it if necessary. An employer must give notice of certain rights under the Federal law, in writing, when advising the employee or applicant of the adverse action. Failing to perform any of these obligations may give rise to a claim for damages against the employer or the agency that provided the employer a background report. Damages can include lost income, emotional distress or, if actual damages do not exist, statutory damages as determiend by a judge. The law also provides for the potential recovery of attorney’s fees and the cost of litigation.