Fair Credit Reporting Act (FCRA) and Employment

Criminal History Search Request
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When employers conduct a check of your background (including credit, criminal, past employer checks) using a third party, the background check is covered by The Fair Credit Reporting Act of 1970 (FCRA).

Below, learn more about FCRA, and how it impacts any background checks done by employers. Also read below for more general information about background checks, and your rights as related to background checks.

What is the Fair Credit Reporting Act (FCRA)?

The Fair Credit Reporting Act (FCRA) is federal legislation meant to promote fair, accurate, and private background checks and other consumer reports. FCRA oversees the collection and use of consumer credit information.

What is a Background Check?

A background check is a review of someone’s records. These reports can include credit checks, driving records, criminal background information, and other documents that show a history of the employee.

Employers usually conduct some sort of background check on job seekers though not always through a third party organization and they may not check on all elements of your background. Typically, they only conduct checks on people who are far along in the application process. A background check helps an employer to verify information shared by a job seeker and to uncover any vulnerabilities such as indebtedness or a criminal history that might make it more likely that the candidate would act unethically on the job.

Many employers use a third party to conduct a background check. When they do this, they must adhere to FCRA regulations.

Below is a list of types of background checks:

Fair Credit Reporting Act (FCRA) and Employment

FCRA shapes the way employers can ask for, receive, and use a background check from a third party.

Employers are subject to certain expectations and laws before reviewing any consumer report in the case of hiring new employees.

Before an employer can get a consumer report for employment purposes, they must notify you in writing and get your written consent.

If an employer decides not to hire you because of your report, they must give you a pre-adverse action disclosure that includes a copy of the report and a copy of your rights.

They must then give you notice that they have decided not to hire you and let you know the name and address of the Consumer Reporting Agency and information on your right to dispute the report.

A person also has the rights to all records in his or her name and can disclose their file at any time. He or she can ask for a credit score, dispute inaccuracies or confusion, or seek damage from companies that violate his or her rights. 

FCRA and State Law

While the FCRA is a federal law, many states have their own laws when it comes to consumer reports. As a result, a person may have more rights under state law depending on their jurisdiction. Consult your state department of labor about any laws in your location.

Illegal Use of Background Checks

Employers cannot use background checks to discriminate. Hiring discrimination refers to an employer making a hiring decision based on race, national origin, sex, religion, disability, genetic information, or age.

If you suspect a background check by an employer has been used in a discriminatory way, contact the Equal Employment Opportunity Commission (EEOC).

Can I Say No to a Background Check?

Background checks are becoming more and more common among employers during the job hiring process. While you can say no to a background check, an employer may choose not to hire you because of this.

However, if you are asked to fill out information for a background check very early on in the process (such as during an initial interview), and are uncomfortable with that, you could always ask if you could fill out the form after the interview. You can ask to fill it out once you and the employer have both decided whether you are moving forward in the job hiring process. However, keep in mind that the employer could reject that request.

Generally, prepare for a number of requests for background searches during your job search process.

Preparing for a Background Check

Are you ready for an employer to check your background? If you are job searching, it's a good idea to know about any red flags that might be on your record, so you can plan on how to handle them. The best way to prepare for an employment background check is to be aware of the information that an employer might find - in advance. 

You will need to decide whether to preemptively volunteer any information regarding red flags that will show up in a background check. There is no imperative to share information that may detract from your candidacy unless you are directly questioned about that aspect by an employer. If you do decide to explain any issues, you should generally wait until an employer mentions that they are conducting a background check and requests your permission to proceed or at least until you have made a favorable impression through the interview process.

Keep your explanations short and focus on how you have made changes to overcome any problems. For example, if your credit score is low but impacted by a spouse and you have subsequently been separated, you might mention those circumstances.