LEGAL REQUIREMENTS FOR CHECKING CONSUMER REPORTS ON JOB APPLICANTS WHERE PERMITTED BY ILLINOIS LAW

By: David B. Pogrund

There has been a new trend in class action lawsuits against employers who use consumer reports as a way of screening job applicants. Specifically, the Fair Credit Reporting Act (hereinafter referred to as "FCRA") provides that there are 3 major pre-requisites for an employer to use a consumer report in its determination of whether or not to hire an employee, which are as follows:

1. An employer must obtain written authorization from a potential employee to conduct a background check. Significantly, this employee notice cannot be contained within the employment applicant or any other document and it must be in a "stand alone" disclosure document;
2. The second disclosure is a "pre-adverse action notice," which requires that an employer provide a copy of the consumer report with any negative information so that the employer or job applicant has a chance to respond or dispute the information; and
3. Employers are also required by the FCRA to provide a "post-adverse action notice" if they have made a decision based upon information in a consumer report. They must then give the person a reasonable time to dispute and correct the information.

If you or your company are considering use of consumer reports or background checks in making employment decisions, it is essential that you follow the FCRP and at a minimum the 3 notice/disclosure requirements described above.