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The Labor & Employment Report

FCRA Obligations of Former Employers

Posted in Background Checks, HR Compliance, Laws & Regulations, Litigation

Most (I hope) employers understand that they have to comply with the notice and authorization requirements of the Fair Credit Reporting Act (FCRA) when using a third party to conduct background checks of current and prospective employees.  What many employers don’t realize is that there are certain FCRA obligations that may apply with regard to former employees, as illustrated in Maiteki v. Marten Transportation, Ltd. et al.

Three former employers of a truck driver reported false negative information about the driver’s accident record to a consumer reporting agency.  Because of the negative reports, the driver couldn’t get another job.  When the driver discovered the wrong information on his record, he contacted his former employers and asked them to correct it.  Each of them told him that that they would investigate and remove the false reports.  Sadly for him (and now for them), none of them did so.  After continuing to be rejected from employment, the driver repeated his requests to his former employers.  Again, they failed to do anything.  He also contacted the consumer reporting agency, which followed up with one former employer.  No corrections by the former employers were ever made.  The frustrated driver then sued each of his former employers under FCRA.

Unfortunately for the driver, the federal district court found that FCRA doesn’t provide a cause of action against former employers for providing false or inaccurate information to a consumer reporting agency.  (Really?  Huh.)  But the court did find that if an employer is informed by a consumer reporting agency that there is a dispute about the accuracy or truthfulness of information that they have provided to the agency, FCRA imposes an obligation on employers to “conduct an investigation with respect to the disputed information.”  The court also held that former employees can bring a claim against employers who fail to conduct a reasonable investigation.

The lesson for employers here is that they should be careful to provide accurate and truthful information about former employees to a consumer reporting agency.  (This information may include driving records, licensing, salary, termination information, etc.)  In addition, if an employer receives a complaint that the information provided is not correct, it is important for that employer to investigate the complaint and make any necessary corrections promptly.