Small Biz Tip: Pre-Screening Employees: The Fair Credit Reporting Act (FCRA)

Tips from June 25, 2009

The Small Business tips today will be discussing the Fair Credit Reporting Act (FCRA).

1. Employers generally ask a credit reporting company for credit, employment history, motor vehicle records, criminal background, and references which must comply with the FCRA requirements.
2. Under the FCRA, a credit reporting company will not provide an employee’s credit report to an employer without proper written consent.
3. As an employer, if you decide to not hire or promote an employee based on their credit report, you must provide a copy of the report and let the employee know the right to challenge the report.
4. FCRA also requires businesses to report accurate information regarding debts owed to a credit reporting company by a debtor to avoid costly fines.

Daily Overview: The FCRA protects credit reports of employees.  For more information, go to the Fair Credit Reporting Act. 

I am not an attorney. I have attempted to condense complicated and detailed legal issues into 140 characters per line. My interpretation may not be exact. Please contact an attorney for professional legal advice.

For more information, please visit the American Bar Association.