Employers Using Criminal Background Checks Should Comply With the FCRA: Part I

Employers who use criminal background checks as part of their hiring practice are likely required to comply with the Federal Fair Credit Reporting Act (“FCRA”) because those employers obtain “consumer reports” from a “consumer reporting agency” (as those terms are defined under the FCRA).  See 15 U.S.C. §§1681 et. seq.   Many employers purchase criminal background checks from national providers, or otherwise subscribe to a database service where they can retrieve similar information.  Those employers in turn make hiring decisions based on those reports.  Those same employers should be prepared to comply with the FCRA.

The FCRA defines a “consumer report” as any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for . . . (B) employment purposes.” 15 U.S.C. §1681a(d) (emphasis added).

The key here is link between the phrases “any information” and “for…employment purposes.”  Arrest and conviction information almost certainly constitutes information “bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.”   Thus, criminal background checks are almost certainly consumer reports.  

However, a “consumer report” must also come from a “consumer reporting agency”, which the FCRA defines as “any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.”  15 U.S.C. §1681a(e).  Most criminal background check providers satisfy this requirement.  

Accordingly, employers who use criminal background checks as part of the hiring process are well advised to comply with the FCRA.  Part Two of this article will discuss how employers may do so.