Background Checks Okay, But Employers Must Tread Carefully

There has been a surge in the number of lawsuits making claims under FCRA, the Fair Credit Reporting Act, which most employers now understand applies not just to credit reports, but to consumer reports, broadly defined. Plaintiff attorneys, according to an article in Bloomberg BNA by Dechert attorneys Melissa B. Squire and Jeffrey W. Rubin, are finding the law’s strict provisions and enforcement scheme make it “perfect for class action lawsuits.” FCRA is not, however, a blanket prohibition on using consumer reports of various kinds in making employment decisions, but employers “are learning the hard way that they have to sweat the small stuff,” the authors write. “The law’s procedure for procuring and using background check reports contains numerous steps and a host of super-technical requirements.” This article summarizes the law, identifies some common mistakes made by employers, and outlines best practices for using credit and consumer-type reports without running afoul of FCRA’s provisions.