Many organization’s conduct various background checks on candidates before sending them an offer letter. One of the checks could involve collecting consumer data about the candidate from some Central Recordkeeping Agencies (CRA). These are either individuals or organizations who compile consumer reports about individuals for other organizations. These reports are also used for promotion or retention purposes. The consumer reports contain information about the credit characteristics of the individual, lifestyle choices and overall consumer behaviour. For example, if a report indicates that an individual consumes a lot on credit, the organization may not want to hire the candidate as their motive might be to only pay off the debt, and hence may switch to any organization that pays more. The reports can also contain information about criminal history and driving records. A rash driver with a number of tickets could be assumed to be an aggressive person and hence not suitable for the job.
Clearly, privacy becomes an issue when organizations decide to conduct such background checks and the Fair Credit Reporting Act (FCRA) is what protects the candidates from breach of privacy. There are essentially two motives of the FCRA, 1) to protect the privacy of the individual and 2) to provide accurate and updated information to the organization seeking it.
In the year 1997, amendments were made to the act that added some obligations to the employer seeking the reports.
1) Written Notification and authorization
Before collecting the information, the employer must give notice to the concerned candidate and also receive written approval in order to go forward with the check.
2) Adverse actions
Adverse actions such as rejecting a candidate based solely on the consumer reports can only be taken in two steps.
The candidate must be given a copy of the consumer report, a “Pre-Adverse Action Disclosure” document and also a copy of the rights of the individual under FCRA.
Further the rejected candidate must also be given the details of the CRA from which the report was obtained along with notice that of the candidate’s rights to dispute any information given on the report.
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