Employer Background Check

Have you recently been subject to a wrongful background check by a potential employer?  Have you been denied employment based on a background check?  Take action to protect your rights.

In order to ensure the identity and proficiency of a potential employee, many employers run background checks as a part of the employment process. These background checks often involve the employer pulling and reviewing the potential employee’s credit report and/or hiring an investigative agency to gather background information on the potential employee.  These background checks can reveal a great deal of information on the potential employee to the employer, such as work history, the existence of a criminal record, and other public records. 

Although conducting background checks are a vital part of the employment process, employers are required to comply with federal law during their review. Particularly, the Fair Credit Reporting Act (FCRA) and related laws have several requirements related to background checks that employers and background check companies must follow. Even if a background check company does not consider itself a credit reporting agency (CRA) under the FCRA, the company can still be subject to the FCRA if it reviews and assembles consumer credit information in a report (commonly referred to as a “consumer report”) for a third party. 

If an employer gets information from a company that is in the business of gathering and compiling consumer credit information into a consumer report, the FCRA and related laws require the following: The employer must give a written notice to the potential employee that the employer might use the consumer report for decisions related to the potential employee’s employment.  This notice has to be “clear and conspicuous” and separate from the employment application. 

If the employer intends to request a company to provide an "investigative report"  (which is a report that is based on personal interviews concerning a person's character, general reputation, personal characteristics, and lifestyle) the employer must also inform the potential employee of his or her right to a description of the nature and scope of the requested investigation.

Before obtaining the consumer report, an employer is required to obtain the potential employee’s written consent. 

In fact, the employer must certify to the company from which the employer intends to get a background report that: 

  • The employer notified the potential employee and got the potential employee’s consent to get a consumer report;
  • The employer complied with the FCRA’s requirements related to background checks; and
  • The employer won't discriminate against the potential employee, or otherwise misuse the information in violation of federal or state law.

The FCRA and related laws have additional requirements for employers when refusing to hire a potential employee based on information obtained from a consumer report, including the following:

Before the employer refuses to hire the potential employee based on a consumer report, the employer must give notice to the potential employee.  The notice must include a copy of the consumer report that the employer relied on in making its decision, as well as a summary of the potential employee’s rights under the FCRA.  The employer must give the potential employee a “reasonable” amount of time to allow the potential employee to dispute any information in the report. The Federal Trade Commission (the government agency tasked with enforcing the FCRA) has stated that 5 business days is generally reasonable. 

After the employer refuses to hire the potential employee based on a consumer report, the employer must inform the potential employee that:

  • The potential employee was rejected because of information contained in the consumer report, along with the name and contact information of the company that provided the consumer report;
  • The company that provided the consumer report didn't make the hiring decision and can't give specific reasons for the hiring decision; and
  • The potential employee has the right to dispute the accuracy or completeness of the information in the consumer report, as well as the right to get an additional consumer report for free from the company providing the consumer report within 60 days.


An employer’s violation of the FCRA’s rigorous framework for the proper use of a background check can be subject the employer to monetary penalties ranging from $100 to $1,000 plus attorneys’ fees for “willful” violations, and actual damages plus attorneys’ fees for “negligent” violations.

Additionally, if the employer violated the FCRA with respect to numerous potential employees, a class action lawsuit may be the appropriate enforcement tool to hold the employer accountable.  In 2018, Uber settled an FCRA class action lawsuit for $7.5 million for purportedly conducting background checks without giving proper notice and or obtaining the required authorization.  In another, similar case, Amazon was forced to settle an FCRA class action lawsuit for $5 million.


Employers are not the only parties whose actions are governed by the FCRA with respect to background checks.  

If an employer uses a company to compile a consumer report, that company is considered a Credit Reporting Agency (known as a “CRA”) under the FCRA.  The FCRA requires that CRAs maintain reasonable procedures to assure the highest level of accuracy of the credit information that they report to employers.  Additionally, CRAs are only allowed to provide consumer reports to someone with a “permissible purpose,” such as an employment background check.

In the event that a consumer disputes credit information, a CRA is required to conduct a “reinvestigation” into the information reported, which requires the CRA to make a reasonable effort to determine the validity of the reported information.  A CRA must also take proper steps to dispose of consumer information by either shredding, burning, or pulverizing the records (or destroying any related electronic information).  Likewise, companies and groups that provide information to CRAs (known as “Furnishers”) are also governed by the FCRA with similar requirements as CRAs. 

Under the FCRA, Furnishers are restricted from sending certain information to CRAs, such as information that would cause a reasonable person to doubt the accuracy of the information or information that a consumer properly reported to a creditor as inaccurate.  Additionally, if a Furnisher has reason to believe that information it has sent to a CRA is inaccurate or incomplete, it is required to promptly notify the CRA of the issue and provide the necessary corrections to the CRA.

As is the case of an employer, if a CRA or a Furnisher violates the FCRA, it may take the force of a lawsuit to hold them accountable.


If you were recently subject to a wrongful background check by an employer, if you were denied employment based on the results of a background check, or if a CRA or Furnisher wrongly acted in violation of the FCRA with respect to your credit information, contact the attorneys at Cohen & Mizrahi LLP now to protect your rights.  The attorneys at Cohen & Mizrahi LLP have significant experience litigating under the FCRA on behalf of their clients.  Let the attorneys at Cohen & Mizrahi LLP fight for you!


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