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Skirting the FCRA? Michigan

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  • Skirting the FCRA? Michigan

    Thank you for making this great forum available. Three questions for you, please:

    1) The employer is using a paid third-party service to collect background information on applicants (with consent), and then going directly to the source of the info to confirm. For example, if the report indicates an applicant was arrested for theft in another state, the employer follows up directly with the other state, and considers this an in-house report not subject to the FCRA notification requirements. The info is then used to make employment decisions. Is this legit?

    2) The employer is accessing personnel files to obtain identifying details in order to conduct these same 3rd-party info collections on current employees, without their consent or knowledge. The information may not be "officially" used in employment decisions, but they can't un-know it, right? Unknown whether they are checking everyone or only select individuals, but it is not related to any type of misconduct investigation or suspicion.

    3) The info provided by the 3rd-party service includes criminal history, civil filings and judgments, traffic tickets, credit info, housing records, deeds including home values, political affiliation, names of associates, and more. Are any of these areas off-limits?

    This employer has no employees with security or special clearance requirements, and it appears they are doing these checks out of curiosity as much as anything. I'd appreciate any wisdom you can share on the legality of the practices. Thanks in advance for your time and advice.

  • #2
    #1-- the info can be used to make decisions under FCRA but the disclosure must follow FCRA rules -- so I would say that notification would need to be followed since the original information was from the 3rd party source and the employer would not have known about it otherwise

    #2-- are you sure that the consent signed at or before hire didn't include language regarding ongoing checks? Because that is not uncommon and often the employee does not have to be told they are doing it

    #3 -- a few are shades of gray -- criminal and civil issues could be issues; and honestly the employer shouldn't be checking or using information that doesn't directly relate to the job at hand.

    That said, I don't know a lot of employers who have the time and money to sit around doing background checks unless they have a business need to do so. It would surprise me if it was just curiosity and it would be unprofessional, but not much above would cross into illegal. Bad business practice though? maybe.


    • #3
      Thank you so much for your thoughtful response. I agree that the FCRA consent & notification requirements should be observed, and think they are violating the law by not providing adverse action notices. Since the reports do contain credit info, do you think the FTC of Consumer Financial Protection Bureau would respond to a complaint?

      The consent forms signed upon hire don't specify a time frame, so I think you are right that they could argue there is no expiration date. It would be an unwelcome shock to people and has not been past practice, but they probably could make a case that the consent continues for the duration of employment. Apparently the decision to check everybody was made after it was learned that a former employee had a criminal record that would have precluded her employment if it had been disclosed. I get that, but it seems so unethical to me to do this without informing people, and without a procedure in place for what to do with the information once it is revealed.

      Is there anything to do about it at this point but wait and see if/how the information is used?

      Thanks again for the guidance - much appreciated!


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