Most Americans when thinking of the status of their credit reports think about being able to obtain credit or loans. But your credit report is also being used to determine if you obtain the job you just applied for, or even to keep the employment you have currently.
Many employers are digging deeper into lives of employees or potential employees to determine if they will be a benefit or a threat to their company financially. Employers use credit reports to determine if you are responsible, reliable, and also to confirm the identity of the applicant or employee.
If an employer obtains a credit report of an applicant, or an already established employee, there are rules that need to be followed. The FCRA (Fair Credit Reporting Act) specifies that only certain information can be revealed to an employer. Employers must also prove there is a legitimate reason to acquire information from an applicant’s or employees’ credit reports. An example of a permissible purpose to obtain a credit report would be if the applicant or employee will have access to cash or assets of the company.
Employers must also provide mandatory notices to applicants they refused for employment and to employees that were terminated from employment due to their credit report. The employer must notify the applicant or employee of their rights stipulated under the Fair Credit Reporting Act. The applicant or employee must be given access of a copy of the credit report and the name of the credit reporting agency as they have the right to obtain a free copy of their credit report.
Two companies recently had to pay civil violations to settle allegations when they failed to give proper notices to employees they terminated and applicants they denied employment to. The employers violated the Fair Credit Reporting Act by failing to inform them of their rights. Between the two companies, a fine equaling $77,000 in civil penalties had to be paid for the FCRA violations.
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