The Fair Credit Reporting Act (FCRA) allows employers to obtain a consumer credit report (CCR) when evaluating a person for 
employment, promotion, reassignment or retention. I recommend to clients that these reports only be used when a person is assigned to handle money or check writing, engage in administrative functions relating to accounts receivable or payable, purchasing, selling, managing those functions and/or any other decision making assignment relating to company funds/assets. For instance, a CCR should not be used when hiring/evaluating a line employee working in some aspect of manufacturing. However, such a report does have relevance as relates to a line supervisor having purchasing and/or distribution authority. The FCRA indicates that CCR content has a “bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.” That’s potentially powerful information which should be handled carefully.
The FCRA and the Federal Trade Commission (FTC) mandate a written notification process between the employer and the applicant/employee as relates to pre-employment or retention information gathering and also when CCR’s are used. Your counsel should insure that any written/oral communications in this regard comply with the FCRA and the FTC interpretations/rulings. Separately, we offer and encourage the use of a document that supplements the employer’s notification process so that the applicant/employee knows from where the CCR is being obtained and under what authority. Complete transparency should be the rule.
Obtaining thorough and legally compliant background check information (with or without the use of a CCR) is one critical component of the human resource screening process. Following federal and state guidelines requires preparation and thoughtfulness, and to insure that your process follows the spirit and the letter of applicable rules and law, counsel should have input about each stage.
A primary goal is to hire, keep the best candidate and minimize the chance of fraud against the organization. Invest at the front end and reduce the potential for tragedy, emotional upset and an expensive outcome after that new employee is on staff.
Backgroundcheckswork.com is a subsidiary of and is fully staffed by investigators from Research North, Inc., a professional private detective service providing support to the business community and the insurance industry since 1981. The company specializes in legally compliant inquiries for small and medium sized Michigan and Wisconsin businesses wanting to evaluate individuals seeking employment, promotion, reassignment or retention as employees.
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