Credit File Consequences (FCRA)

Credit File Consequences

Employment Law Attorneys Helping Florida Residents

More and more employers are checking a potential employee’s credit history before deciding whether or not to hire them for some or all positions. However, some do this in violation of the Fair Credit Reporting Act (FCRA), federal legislation designed to promote the fairness, accuracy, and privacy of consumer information contained in the files of consumer reporting agencies. It was originally passed in response to willful and/or negligent inclusion of outdated or inaccurate information in people’s credit reports.

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Background Check Errors

The FCRA was passed in order to protect people from background check errors, which could severely impact their lives. This could be the case especially with employment opportunities that were missed as a result of an inaccurate credit report. These reports weren’t designed as an employment screening tool, which means they contain a significant amount of history potential employers may not need. However, they can be purchased by businesses through several different companies. They are also legalif the potential employee has given them permission to do so beforehand. If the information is inaccurate or outdated, a potential employer may get a poorer impression of an applicant and decide not to hire. It is usually a violation of the FCRA to have some of the following errors on a report:

  • Reporting old debts as new or re-aged
  • Reporting an account as active when it was voluntarily closed by a consumer
  • Reporting information more than 7 years old (bankruptcy) or 10 years old (civil judgments)
  • Failing to report that a debt was discharged in bankruptcy

Pre-Adverse Action Notice

Employers should be wary of denying employment to an individual if they have forgone their adverse action duties. While it is legal to perform a credit check on a potential employee, there are federal guidelines in place to ensure an employer is complying with FCRA regulations. In order to ensure compliance, you must provide a Pre-Adverse Action Notice to the affected individual if an employer plans on taking adverse action on the basis of their findings in a background report. It must be done with a reasonable amount of time for the individual to respond. In other words, this must be sent even before an employer decides to make a final decision. In this notification, an employer must provide an applicant with a disclosure including a copy of the background report and a copy of the Federal Trade Commission (FTC) document “A Summary of Your Rights Under the Fair Credit Reporting Act.” This allows an individual to look at any inaccuracies on their report and attempt to remedy them.

Adverse Action Notice

An Adverse Action Notice must be provided by an employer after the action has taken place. For example, if an employer decided not to hire an applicant because of a finding in his or her background check, the employer would need to provide oral or written notification that the action has happened. The notification must include the following:

  • Contact information of the credit reporting agency that supplied the report
  • A statement that the agency that supplied the report did not make the decision to take the adverse action and can’t give specific reasons for it
  • A notice of the applicant’s right to dispute the accuracy or completeness of any info the agency provided
  • A notice of the applicant’s right to an additional free consumer report from the agency upon request within 60 days

EEOC

The U.S. Equal Employment Opportunity Commission (EEOC) has regulations regarding pre-employment inquiries and financial information. The information involved includes current or past assets, liabilities, credit rating, bankruptcy or garnishment, refusal or cancellation of bonding, rental or ownership of a house, car ownership, length of residence at an address, charge accounts, furniture ownership, and bank accounts. While federal law allows employers to ask for this information, it does prohibit employers from illegally discriminating when using financial data to make employment choices. For example, if an employer applies any financial requirement differently to different people based on race, color, national, origin, religion, disability, sex, age, or genetic information, he or she is violating the law. An employer also can’t have a financial requirement if it doesn’t help him or her accurately identify reliable and responsible workers and if the obligation significantly disadvantages people of a particular group. An employer might also have to make an exception to a financial requirement for people who cannot meet the restriction because of a disability.

Contact Us About Your Case

If your application was denied in violation of the FCRA, or you’re an employer facing a lawsuit claiming that you’ve violated the terms of the FCRA or the laws of the EEOC, don’t hesitate to give us a call. Our experienced Florida employment law attorneys can help. LeavenLaw has been helping Florida residents since the 1970s, and we have built a reputation for excellence in representation. Our firm is focused on putting the people we help first, which is how we provide unparalleled service and compassionate, personalize, affordable, and efficient legal counsel.

To get started on your case today, call us at (855)-532-8365 or fill out our online form to schedule a case consultation.