Employer needs employee’s consent to get credit report

Q:        I am new to applying for jobs so I am not very familiar with my rights as an employee-applicant. Some employers require me to fill out a simple application and submit to a drug test. There are employers, though, who tell me that I also need to give them authorization to get a consumer report on me. What are my rights here?

A:        The federal Fair Credit Reporting Act (“FCRA”) authorizes an employer to obtain a consumer report from a job applicant. However, the FCRA regulates what an employer may or may not do under these situations. Specifically, the FCRA requires an employer to provide a job applicant with a standalone disclosure stating that the employer may obtain the applicant’s consumer report during the hiring process.

The FCRA came into existence in 1970. The law was created to promote ‘fair and accurate credit reporting’ and to ‘protect consumer privacy.’  Consumer reporting agencies were required to “adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with the requirements” of the law.

FCRA, thus, imposes “a host of requirements concerning the creation and use of consumer reports.”  Two of these requirements are the following:

1. An employer who obtains a consumer report about a job applicant must first provide the applicant with a standalone, clear and conspicuous disclosure of its intention to do so,
2. The employer must obtain the applicant’s consent for the employer to obtain the applicant’s consumer report.

These disclosure and consent requirements are intended to “secure job applicants’ privacy rights by enabling them to withhold authorization,” while also “promoting error correction” by providing applicants “an opportunity to warn a prospective employer of errors in the report before the employer decides against hiring the applicant on the basis of information contained in the report.”

The disclosure and authorization requirements state in part as follows:

Disclosure to Consumer … [A] person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless–

• a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and
• the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.

The FCRA provides a private right of action against those who violate its statutory requirements in procuring and using consumer reports.  The affected consumer is entitled to actual damages for a negligent violation. However, for “a willful violation” a consumer may recover additional statutory damages ranging from $100 to $1,000, punitive damages, and attorney’s fees and costs.”

The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no-cost. You can contact the office at (818) 291-0088 or visit www.joesayaslaw.com. [For more than 25 years, C. Joe Sayas, Jr., Esq. successfully recovered wages and other monetary damages for thousands of employees and consumers. He was named Top Labor & Employment Attorney in California by the Daily Journal, consistently selected as Super Lawyer by the Los Angeles Magazine, and is a past Presidential Awardee for Outstanding Filipino Overseas.]