Many employers require a background check before finalizing a job offer to a prospective employee. Federal law protects individuals from unauthorized background checks and provides rights to job applicants and current employees if an employer withdraws a job offer or a promotion or terminates an employee.

Before an employer is allowed to engage a consumer reporting agency to conduct an employment background check, the employer must obtain the applicant’s or employee’s written authorization. The employer must also provide notice that it may use the information obtained from the reporting agency to make its employment decision.

Before an employer takes any “adverse action” against an employee – such as withdrawing a job offer or promotion or terminating existing employment – the employer must give the employee a “copy of the [background or consumer] report” and a document called A Summary of Your Rights Under the Fair Credit Reporting Act (available here). This allows potential or existing employees to talk with the employer about the contents of the report and to contact the reporting agency to correct errors in the report.

If an employer decides to withdraw a job offer, terminate an employee, or deny a promotion, it must provide the employee or applicant with notice of this decision (orally, in writing, or electronically) and the following information:

1. The name, address, and phone number of the company that supplied the credit report or background information;

2. A statement that the company that supplied the information didn’t make the decision to take adverse action and can’t give you any specific reasons for it; and

3. A notice of your right to dispute the accuracy or completeness of any information in your report and to get a free report from the company that supplied the credit or other background information if you ask for it within 60 days.

Employers who fail to comply with federal law addressing consumer reports and employment background checks face the potential for significant penalties from the Federal Trade Commission or private parties in state or federal court.

Each situation presents a unique set of facts and requires a case-by-case analysis. The information provided above presents general information on consumer and employee rights and is not intended to provide legal advice. If you believe that an employer has violated your rights relating to employment background checks, contact one of the employment attorneys at Hawks Quindel, S.C

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Nicholas Fairweather