Precise Background Checks

Compliance with Fair Credit Reporting Act (FCRA)
A federal law called the Fair Credit Reporting Act (FCRA) is designed to protect individuals by
promoting accuracy, fairness, and privacy information in the file of every Consumer Reporting
Agency (CRA). Most CRAs are credit bureaus that gather and report information.
Pre-employment screening firms, such as Precise Background Checks, are also CRAs and are
governed by the FCRA. The law provides requirements and rules for pre-employment
background checks, called Consumer Reports.

The following information regarding the FCRA is provided as general guidance to Precise
Background Checks clients. The information will address requirements and obligations regarding
employment background checking. It is not implied or intended as legal advice. The employer
retains the responsibility to understand the FCRA. Because the information provided by Precise
Background Checks is general and incomplete, it is recommended that you consult legal
counsel for advice. (The following links open in a new browser window.)

FCRA: Using Consumer Reports
FCRA: What Employers Need To Know
FCRA: Obligations of User Under The FCRA (Appendix C to Part 601)
FCRA: Summary of Your Rights Under the FCRA (Handout)
Sample Pre-adverse action letter
Sample Notice of adverse action letter

Complete text of the FCRA, 15 U.S.C. 1681-1681 u, can be found at http://www.ftc.gov

California Compliance
California Investigative Consumer Reporting Agencies Act (ICRA) Civil Code Section 1786 is the
law that governs pre-employment screening for California employers.

In an effort to combat the growing crime of identity theft, California's legislature revised the
ICRA, greatly increasing the burden of California employers. Once most employers recognized
what had happened, it was too late. The law went into effect January 1, 2002 leaving many
employers scrambling to comply with the law's new requirements. Based on an outcry from
employers, legislature passed a "clean-up" bill AB 1068.

First, let's look at AB 655 and what it started. The bill required an employer to notify
applicants or current employees every time a background check was obtained. It set forth
specific requirements regarding timing and what information must be provided. AB 655 also
contained two changes to existing law. First it specifically required that an employer provide a
copy of the report to the consumer within 7 days of receipt, whether it was requested or not.
Second, the law extended its scope to cover background checks and investigations conducted
in-house by an employer, without the use of a consumer reporting agency.

In a nutshell, here are some the newly enacted amendments from AB1068 that went into
effect on September 28, 2002.

California employers must provide notice and obtain consent every time they hire a
consumer reporting agency to conduct a background check, except for investigations into
suspected misconduct or wrongdoing.

Employers do not have to provide a copy of the report regarding investigation into
suspected misconduct or wrongdoing.

Employers must notify the consumer if adverse action is taken based in part or wholly on
information provided in the background check, and may have to provide a copy of the
report.

Employers must provide consumers with public record reports obtained directly by the
employer, unless a consumer waives his right. Employers do not have to provide information
regarding background checks, reference check or investigation conducted in-house other
than these enumerated public records.

Each applicant will have the ability to check off a box on the consent/disclosure sheet and
have the employer send a copy of the background report directly to the applicant.
Employers may outsource the sending of the background report to their
background-screening firm. California law already has a similar rule for requesting credit
reports.

The law revised the rules about a special cover sheet. A screening firm is allowed to post
the required notice on the first page of the report instead.

The new law retains the seven (7) year limitation on a background-screening firm obtaining
criminal records. However, the new law clarifies that there is an exception for employers
that are required by a governmental agency to go back further when checking
qualifications.