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Helping You Navigate Workplace Issues in California

Fair Credit Reporting Act and Your Job Application

While the guidelines of The Fair Credit Reporting Act (or FCRA) are fairly straightforward (see below), there are still grey areas where applicants may be at risk of having their FCRA rights breached. A wealth of recent lawsuits have been filed against national employers such as Disney, Domino’s Pizza, K-mart, Whole Foods Market, Home Depot and CVS among others, for allegedly violating the FCRA.

Examples of this behavior include:

Using disclosure and authorization documents that include extraneous and unnecessary items.

Companies facing lawsuits: Whole Foods, UBS, Publix, Extended Stay America, and O’Reilly Auto Parts
Example: The Whole Foods lawsuit alleges that the company’s authorization form contained extraneous verbiage, including an acknowledgement that the application for employment does not create an employment contract, a statement that the applicant waives the receipt of a copy of any public record, and an admission that the applicant has not knowingly withheld any information.
Failure to make specific disclosures before using the background check for an adverse action.

Companies facing lawsuits: Kmart, Disney, CVS
Example: A Kmart Corporation lawsuit (which was ultimately settled for $3 million) alleged that the company sent results of background checks along with an outdated statement of consumer rights under the FCRA to applicants.
The use of a click button as the only means to obtain an applicant’s consent to submit to a background check

Companies facing lawsuits: Home Depot, Kmart
Example: Home Depot is facing a class action lawsuit which alleges that the company ran credit reports and background checks without notifying employees and job applicants. According to the prosecutors, the simple “decline” or “accept” button does not constitute a written authorization.

What does the FCRA stipulate?

Before an employer gets your consumer report, they

  • Must inform you, in a written and stand alone format, that they might use information in your consumer report for employment decisions. This notice cannot be in the employment application.

  • Must get written permission from you to get your consumer report.

Before an employer takes adverse action (rejects your job application based on what is in the report), they must give you

  • A notice which includes a copy of the consumer report they used to make their decision.

  • A copy of A Summary of Your Rights Under the Fair Credit Reporting Act.

After an employer takes adverse action,

  • They must give you a notice (orally, in writing or electronically) that they have taken the adverse action based on information in your consumer report.

This notice must include:

  • the name, address, and phone number of the consumer reporting company that supplied the report;

  • a statement that the company that supplied the report did not make the decision to take the unfavorable action and can’t give specific reasons for it; and

  • a notice of the person’s right to dispute the accuracy or completeness of any information the consumer reporting company furnished, and to get an additional free report from the company if the person asks for it within 60 days.


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* Cathleen Scott is licensed to practice in Florida only.

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