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Your rights when an employer wants to see or use your consumer report


The Fair Credit Reporting Act gives job applicants and employees specific legal rights and remedies vis-à-vis employee use of consumer reports.

Understandably, sometimes employers want to do background checks on their employees or on job applicants, including getting consumer reports, which may contain both credit histories and criminal records. When an employer wants to order a consumer report – often using a third-party background-checking company – the employer must follow the procedures in the federal Fair Credit Reporting Act or FCRA.

Possibly even more crucial, the FCRA imposes special requirements on an employer that wants to use the contents of a consumer report to take adverse action such as:

  • Refusal to hire
  • Refusal to promote
  • Demotion
  • Termination
  • Offer of inferior benefits packages or company perks as compared to those of colleagues in similar jobs
  • Change of duties
  • Reassignment
  • And others

The FCRA is enforced by the Federal Trade Commission or FTC, which provides an online information page on this topic.

Can my employer or potential employer order my consumer report?

The FCRA requires that an employer provide a specific written notice to any employee or job applicant, explaining that the employer wants to order a consumer report and possibly use it to take action against the employee or applicant. This notice must be written on a piece of paper that stands alone without other information on it, so that the recipient does not overlook it. It should not be part of the employment application, an issue that has litigated in court.

The applicant or employee must agree in writing to the release of the report to the employer. This written permission may be given on the notice itself.

According to the FTC, if the employer would like to get written permission once to be able to retrieve consumer reports throughout the person’s time of employment, the notice must state this intention “clearly and conspicuously.”

The employer must also certify to the consumer-report supplier that the employer followed the legal notice and permission requirements as well as that it did and will comply with certain other laws.

Do I have any rights when my employer uses my consumer report against me?

The subject of the consumer report gets a chance to review the report for errors or to explain its contents before the employer takes action because of it. When an employer wants to decline a job applicant or intends to take negative action against a current employee, the employer must first give specific notice of this intention as well as a copy of the consumer report itself and a written copy of an official summary of rights under the FCRA.

When the employer takes negative action, it must provide an adverse-action notice to the applicant or employee containing specific items like the contact information of the company that created the report, the employee’s right to challenge the content of the report, the right to get a free copy of the report within 60 days and the message that the company that compiled the report is unrelated to the adverse action being taken by the employer.

Can I file a lawsuit for violation of the FCRA?

An applicant or employee whose FCRA rights have been violated by an employer can sue that employer for damages under the Act. What damages are available depend on whether the employer’s violation was negligent or willful.

Negligent noncompliance may subject the employer to actual damages for loss the employee experienced because of the negligence as well as legal fees and costs if the suit is successful.

Willful noncompliance opens up the employer to actual damages the plaintiff sustained or to damages from $100 to $1,000, and possibly more if the report was obtained under “false pretenses or knowingly without a permissible purpose.” The court may also award punitive damages to punish the defendant as well as legal fees and costs.

The U.S. Supreme Court has said that willful failure to comply with the FCRA could include “not only knowing violations, but reckless ones as well.” The court also held that if the employer’s reading of the FCRA requirements was objectively reasonable, that could not have been a willful violation.

Class action suits may also be filed on behalf of a group of people against an employer who has an alleged pattern of repeatedly violating the FCRA.

If you find yourself in a situation like this, be sure to talk to an informed consumer law attorney as soon as possible to understand your legal rights and options and so as not to miss any deadlines.

Attorney Tom Breeden of the law firm Thomas R. Breeden, P.C., in Manassas represents job applicants and employees facing unlawful use of their consumer reports in Northern Virginia and across the state.