When hiring an employee, companies typically look for a candidate that is the right fit, has the right qualifications, and that the company can afford. In addition to looking for the right candidate, which can be difficult in and of itself, companies have several significant legal hoops they must jump through with employees and applicants during and after the onboarding process. Recently, Congress added another hoop, which employers must comply with as it relates to background checks and disclosures.
In May 2018, Congress passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Act”). In part, the Act requires nationwide consumer reporting agencies to provide a national security freeze to consumers, free of charge. At first glance, the Act seems irrelevant to an employer's hiring practices however, the Act mandates that whenever the Fair Credit Reporting Act (“FCRA”) requires a consumer to receive a summary of their consumer rights, a notice of the new security freeze must be included.
As of September 21, 2018, employers are required to provide applicants and employees subject to background checks, which may result in adverse employment actions, with the revised disclosure form, or a substantially similar form. The revised form is titled “A Summary of Your Rights Under the Fair Reporting Act.” As part of its responsibilities, the Bureau of Consumer Financial Protection publishes model forms a business may use to comply with its disclosure requirements. The recently revised model form includes: (1) information on an individual's right to a security freeze that will prohibit a consumer reporting agency from releasing information in an individual's credit report without express authorization; and (2) the fraud alert consumer agencies must now include in an individual's file as an alternative to the security freeze.
Businesses are urged to begin using the new model form, or a substantially similar form, immediately as a failure to comply with the new disclosure requirements may expose a business to liability and damages for violating the Fair Credit Reporting Act.
Farhang & Medcoff regularly works with employers to handle their most daunting legal challenges and to ensure that companies are always in compliance with the law. Don't get caught out of compliance, consult with an F&M attorney today.