Guide to Understanding the FCRA Download
In this age of increased security risks, workplace violence incidents and negligent hiring lawsuits, employers are using background checks as a tool to identify the most qualified individual available, thereby increasing security and decreasing liability and improving the quality of their workforce. For many employers, pre-employment background checks have become a permanent part of the hiring process.
However, with the rise of computerization of records and the increased availability of information at our fingertips, legislators and consumer rights groups are taking notice of the background screening industry. They make the point that it is important that the rights of the applicant be balanced with the need for employers to hire the best candidate.
The primary law regulating the procurement, preparation and use of a background report is the Fair Credit Reporting Act (FCRA). This federal law was first introduced in 1971 and has undergone several changes over the years. It is designed to protect the rights of consumers (applicants) and to hold the users and preparers of consumer reports accountable for the information contained in and the use of the reports.
If a company’s procedures are not in compliance with the FCRA, it is likely a large group of individuals will have been affected. Plaintiffs are eligible to receive statutory damages (no proof of actual damages required) of $100 to $1000 per violation, and there is no cap on the damages that can be awarded against the defendant. Furthermore, if it is found that an employer willfully violated the FCRA, they can be on the hook for punitive damages, costs of litigation and reasonable attorney’s fees. As the use of background checks continues to increase, so will the volume of case law. Courts are awarding settlements in the millions and lawyers are seeing green.
As with any law, the FCRA is a difficult read and contains much technical jargon. This guide will be expanding on the specific sections of the Fair Credit Reporting Act that are pertinent to reports used for employment purposes.