While you are partying and watching football on January 1 a new regulation goes into effect. It will have an IMMEDIATE EFFECT on how your business must conduct background checks through third-party companies.
Consumer Financial Protection Bureau
The CFPB is a one year old agency that has taken over the enforcement of the Fair Credit Reporting Act (FCRA) from the Federal Trade Commission. This new, 889 person agency, enforces the consumer protection aspects of the FCRA and the Dodd-Frank Act. As we all know this includes criminal and credit background checks performed by third-parties on behalf of employers. If you are not aware of an employer’s responsibility see these previous blog posts:
Background Checks: Why the FCRA Basics Are Important
Background Checks and the Fair Credit Reporting Act
Use of Background Checks Requires Common Sense
Naturally a new agency of the federal government is going to issue its own forms. So as of January 1 they require the use of three new forms:
- A Summary of Your Rights Under the Fair Credit Reporting Act. This is to be provided to employers by the credit reporting vendor that is used. Employers must provide this form to an employee prior to taking an adverse employment action based on a consumer report.
- Notice to Furnishers of Information: Obligations of Furnishers Under the FCRA
- Notice to Users of Consumer Reports: Obligations of Users Under the FCRA
In reality these forms are similar to the forms previously used, but they have been revised to remove references to the FTC.
What an employer must do
If you are an employer who uses a third-party reference or background checking service you must be sure they have supplied you with the new forms. So you know what they look like you can click here and look for Appendix K and view or download the forms. If your service has not supplied you with these forms or has no idea what you are talking about you may want to reconsider working with them.
The EEOC has put a new emphasis on the potential for discrimination in the use of background checks. See EEOC Issues New Restrictions On the Use of Background Checks for further information. Between these two agencies focusing on the use of background checks it behooves you to make sure you are using them correctly and that starts with making sure you have the right forms as of your first background check in 2013.