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New Obligations under FCRA
April 15, 1998-The Fair Credit and Reporting Act ("FCRA") allows employers to request a credit report on job applicants or employees and to use the report for "employment purposes." Recent amendments to the FCRA amplified the restrictions on employers who use such reports.
As of October 1, 1997, employers must provide a job applicant or employee with a separate written document requesting the applicant's or employee's authorization for a credit report. The document must state that the report will be used to determine employment or promotion eligibility and must be written in "clear and conspicuous manner." If an employer takes adverse action based on the credit report (i.e., refuses to hire the applicant), the employer must provide the applicant or employee with the credit report and reapply for employment or promotion.
Any employer who uses credit reports in its employment process should carefully review the FCRA amendment to ensure that it is fully complying with the law.
