Conducting Employee Background Checks? Know the Rules.

Background checks and credit checks can be useful tools for employers to insure they are hiring and retaining quality employees. Different statutes govern employers depending on whether it seeks an investigative consumer report (i.e. containing consumer character, general reputation, personal characteristics, mode of living) or a consumer credit report (i.e. containing consumer creditworthiness, credit sharing, credit capacity).

Employers should be aware that a recent court decision imposed more obligations regarding disclosure to consumers when requesting such reports. In that case, the court held that information in consumer reports can be categorized as both character information and creditworthiness information and, therefore, the employer must comply with both ICRAA and CCRAA. Those statutes require notice to consumers and limits on when and how the reports may be furnished.

Going forward, employers should take note that, to the extent the reports cover categories under both statutes, both statutes should be followed. When in doubt, consult an attorney to insure compliance.

 

 

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