Alert: Update Background Check Forms

September 27, 2018

A provision in a new federal law took effect on September 21, triggering the need for employers to revise standard hiring documents and review their hiring practices. All employers must update their background check forms, advising applicants and employees of the availability of a “national security freeze” to protect them from identity theft. The Bureau of Consumer Financial Protection (CFPB) has updated its model Summary of Consumer Rights that can be used for compliance purposes.

Congress passed the “Economic Growth, Regulatory Relief, and Consumer Protection Act” this past May to address concerns with data breaches. The law requires nationwide consumer reporting agencies to provide consumers free of charge with a “national security freeze” that restricts prospective lenders from obtaining access to an individual’s background report. Lawmakers wanted to make it more difficult for identity thieves to steal an individual’s personal information.

The law mandates that, whenever the Fair Credit Report Act (FCRA) requires a “consumer” to receive a Summary of Consumer Rights, a notice regarding the availability of a national security freeze must be included. Employers, including ILMA members, are brought under the law because applicants and employees are “consumers” for certain employment-related activities.

Employers trigger FCRA obligations when they request a “consumer report” on an applicant or employee, including driving records, criminal records, credit reports, and other reports procured from a credit reporting agency, record-checking company, or third-party firms. Before requesting a report, employers must provide applicants or employees with a standalone document, disclosing the intent to procure the report for employment purposes and obtaining their signed authorization.

If the report contains information that can be used for taking adverse action (e.g., not hiring an applicant or terminating a current employee), then the applicant or employee must be provided with a copy of the report and a copy of the Summary of Consumer Rights. The new law adds the requirement to include the availability of the national security freeze.

“The fix for most employers is to replace their old Summary of Consumer Rights with CFPB’s new, revised model form,” said ILMA CEO Holly Alfano. “If the company used the old form after September 21, check with legal counsel how best to remedy the situation.”