Industry News: Consent & Disclosure and Adverse Action violations, Disclosure / Authorization form revisions

Avoid Fair Credit Reporting Act Violations; New California laws that impact employers

We want to remind all of our clients that it is extremely important to follow FCRA regulations as it relates to Consent and Disclosure and Adverse Action.

Consent and Disclosure:

The Consent and Disclosure form must be provided prior to requesting a consumer report and within three days of an Investigative Consumer Report. The best practice is to always provide consent and disclosure prior to requesting a background check. The consent and disclosure must only have language relating to the consent and disclosure for a background check and must not include language such as release of liability, application questions, terms for employment and unrelated language.

Adverse Action:

Prior to making adverse decisions on applicants based in whole or in part of a consumer report/investigative consumer report, an employer must follow the adverse action process and provide the consumer with a copy of the report, a summary of the consumer rights under the FCRA and the name, address, web address and contact information for the consumer reporting agency that provided the report. The employer must provide the consumer with a reasonable time in which to dispute any of the findings of the report prior to making a final decision based on the report. Aurico recommends that our clients allow for ten working days for the dispute process prior to making the final decision.

There has been an increase in cases related to FCRA violations. Aurico will continue to provide assistance, and during our audit process we will notify clients if their forms do not appear to be compliant. However, we recommend that you review your disclosure and authorization forms and always make sure that each form is in a separate document from the application form. Please contact Aurico with questions, and be sure to work with your legal counsel to review your current documents.

New California Laws:

With the New Year upon us, we want to remind you of two new California laws that will affect you. Both went into effect January 1, 2012 and require revisions to an employer's Disclosure/Authorization forms.
California SB 909 amends CA Civ. Code Section 1786.16, and requires that employers include the investigative consumer reporting agency's (background check company's) Internet website in the Disclosure form. Please contact Aurico if your existing form does not have our web address listed on the form. The purpose is for an applicant to be able to easily access information about Aurico's privacy practices, including whether personal information will be sent outside the U.S. It is not Aurico’s practice to send U.S.- based consumer information outside the U.S.

Additionally, California AB 22 amends CA Civ. Code Section 1785 regarding the use of credit in employment decisions. The amendment generally prohibits employers from using an applicant's or employee's credit history in making employment decisions. Prior to this legislation, employers could request a credit report for employment purposes if they provided prior written notice of the request to the person for whom the report was sought. Assembly Bill 22 significantly changes this landscape by prohibiting employers from using credit reports for employment purposes unless the report is used for one of the limited purposes enumerated by the statute and requires employers to specifically delineate the reason for obtaining the credit report under the statute.
 
What to do:  If you are running a credit report for someone who resides in or is being employed in California, please print the California Credit Notice and check off the reason for running a credit report. The applicant or employee should get a copy of this and a copy must be sent into Aurico along with the Disclosure & Authorization form.