Background Screening: When Do Employers Need to Comply With the FCRA?


The FCRA (Fair Credit Reporting Act) is a federal law that regulates how Consumer Reporting Agencies (CRA) use consumer’s information. The Act compels employers to ensure the information they gather and distribute is a fair and accurate summary of a consumer's credit history. The law is intended to protect consumers from misinformation being used against them.


As a standard, whenever employers use a third party (like Pre-Check) to conduct background checks on either applicants or employees, the FCRA will apply. The FCRA governs how employers both obtain and handle consumer reports, including a regular background check. Furthermore, and FCRA consumer report is defined as any written, oral or other communication of any information by a CRA bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living by the Federal Trade Commission (FTC).


So, for employees, this would include credit reports, criminal history records, driving records, and other background check reports, drug tests, etc. created by a third party. However, if an employer were to do their own investigation, the FCRA would not be applicable. In this scenario, the employer is still required to secure consent from applicants or employees to obtain any of the above reports, and they must disclose that consumer reports may play a role in employment decisions. In the event that information provided by a consumer report results in an adverse employment action against the employee or applicant, the employer must provide the person with a copy of the report and his/her FCRA rights.


FCRA reports exclude any type of preplacement or fitness-for-duty physicals, and any reports generated internally by an employer (like internal reference checking). Drug tests are much more likely to be covered if they are reported to the employer from a CRA.


Because of the sheer complexity of the FCRA, it is especially important for employers to choose a credible CRA when outsourcing pre-employment services such as the aforementioned. What are some of the qualities that define a credible CRA?

·         Full compliance with the FCRA and stays up to date with changing and new laws

·         Thorough background screening with clerk-assisted criminal reports

·         Accurate reports that multiple sets of eyes have seen

·         Timely reports with status updates

·         Excellent security practices, such as the use of Secure Socket Layer technology

·         Easy-to-read reports that explain instead of abbreviating

Pre-Check measures up to these standards and provides superior pre-employment services to help you hire the best. For more information, contact us at or 800-268-2435

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Posted by Sandra Shinn in General


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