Before rejecting an applicant because of a background report

Get permission before ordering

The Fair Credit Reporting Act governs covered reports obtained from consumer reporting agencies for employment. The ordinary process requires a clear, conspicuous written disclosure in a document consisting solely of that disclosure, and the person’s written authorisation; the authorisation may be on that document. Do not bury the disclosure in the job application. The employer must also give the reporting agency the required compliance certification.

Sources: Office of the Law Revision Counsel, U.S. House of Representatives: §1681b(b)(1)–(3), including specified transportation-applicant exceptions Federal Trade Commission and Equal Employment Opportunity Commission: Complete employer guidance, especially before/after adverse action

Let the person see what you are relying on

Before taking adverse action—such as rejecting an applicant or dismissing an employee—based wholly or partly on the report, provide a copy of the report and the prescribed written summary of FCRA rights. The FTC explains that this gives the person an opportunity to review and explain negative information.

Fictional example: a screening report flags a conviction under a similar name. Sending the report only with an already-final rejection misses the separate before-decision step. Confirm the person and consider any response rather than treating the screening company’s flag as your decision. No crime or unsuitable applicant is established by this example.

Sources: Office of the Law Revision Counsel, U.S. House of Representatives: §1681b(b)(1)–(3), including specified transportation-applicant exceptions Federal Trade Commission and Equal Employment Opportunity Commission: Complete employer guidance, especially before/after adverse action

The final notice has a different purpose

When taking the adverse action, the required notice identifies the reporting agency and its contact details, explains that it did not make the decision, and gives the rights to dispute the report and request a free copy within 60 days after receiving the adverse-action notice. If a numerical credit score was used, additional specified disclosures apply.

The 60-day copy-request right is not a 60-day hiring freeze. The cited general provisions do not supply a universal five-day waiting rule either. Discrimination rules still apply regardless of where background information came from.

Sources: Office of the Law Revision Counsel, U.S. House of Representatives: §1681m(a)(1)–(4) Federal Trade Commission and Equal Employment Opportunity Commission: Complete employer guidance, especially before/after adverse action Office of the Law Revision Counsel, U.S. House of Representatives: Complete §1681j(b)