Pre-Employment Background Check

15 U.S.C. 1681b(b)(2)(A) is a prohibition with conditions attached, and the prohibition is the part usually dropped when it is quoted: “Except as provided in subparagraph (B), a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless-“. The first condition requires that “a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes”. Four requirements that fail separately – clear and conspicuous, in writing, before procurement, and in a stand-alone document – each a condition on whether the report may lawfully be obtained at all. Subparagraph (B), the transportation carve-out, is the exception the chapeau names.

The second condition is easy to miss. 1681b(b)(2)(A)(ii) requires that “the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.” So the disclosure document must consist solely of the disclosure, yet the statute expressly names the signed authorization as an allowed inhabitant of that page.

The regulator states the same rule without section numbers. The Federal Trade Commission’s guidance for employers, Background Checks: What Employers Need to Know, says: “This notice must be in writing and in a stand-alone format. The notice can’t be in an employment application.” Its next sentence carries the qualifier usually dropped: “You can include some minor additional information in the notice (like a brief description of the nature of consumer reports), but only if it doesn’t confuse or detract from the notice.” The statutory text is at 15 U.S.C. 1681b.

15 U.S.C. 1681b(b)(3)(A) is the duty this page exists to get right, and it should be quoted with both of its ends intact: “Except as provided in subparagraph (B), in using a consumer report for employment purposes, before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates- (i) a copy of the report; and (ii) a description in writing of the rights of the consumer under this subchapter, as prescribed by the Bureau under section 1681g(c)(3) of this title.” The front end carries the transportation exception; the back end carries the same 2003 cross-reference described above.

It is tempting – and wrong – to say this rule replaces the ordinary adverse-action notice. The general duty at 15 U.S.C. 1681m(a) is triggered when “any person takes any adverse action with respect to any consumer that is based in whole or in part on any information contained in a consumer report”, and it reaches employment too: a denial of employment is an adverse action by definition, and 1681b(b)(3)(B)(i) gives the transportation notice “in lieu of the notices required under subparagraph (A) of this section and under section 1681m(a) of this title” – wording that only works if both would otherwise apply. Employment gets an additional, earlier duty, not a different one.

1681b(b) names no waiting period. The entire timing requirement in 1681b(b)(3)(A) is the phrase “before taking any adverse action” – a sequence, with no interval attached. No day count, no “reasonable period” and no “reasonable time” appears anywhere in that paragraph; the only day counts in the whole subsection are the two three-business-day mechanics inside subparagraph (B). The widely repeated advice to wait a set number of business days is not in these words. The regulator gives a reason rather than a clock: “By giving the person the notice in advance, the person has an opportunity to review the report and explain any negative information.”

Subparagraph (B) runs the other way from a waiting period. Where the applicant is applying “for a position over which the Secretary of Transportation has the power to establish qualifications and maximum hours of service pursuant to the provisions of section 31502 of title 49, or a position subject to safety regulation by a State transportation agency”, and the application was made solely by mail, telephone, computer or other similar means, the pre-action notices are replaced by a notification “within 3 business days of taking such action” – a post-action clock in a narrow lane. A second three-business-day clock runs for supplying the report if the applicant asks for it.

If your question is the non-employment kind, tell us what needs establishing and the lawful purpose behind it and we will scope it.

A different set of duties switches on when the report is assembled by talking to people rather than by pulling records. 15 U.S.C. 1681a(e) defines an “investigative consumer report” as a consumer report, or part of one, “in which information on a consumer’s character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer reported on or with others with whom he is acquainted or who may have knowledge concerning any such items of information.” Method, not subject matter – though a second sentence narrows it, excluding “specific factual information on a consumer’s credit record obtained directly from a creditor of the consumer” or from a reporting agency that obtained it directly from a creditor or from the consumer.

Two clocks follow, and neither is expressed in business days. Under 1681d(a)(1) the applicant must be told an investigative report may be made, in a writing “mailed, or otherwise delivered, to the consumer, not later than three days after the date on which the report was first requested” – a clock that runs from the request for the report, not from the application. That notice must also signpost the further disclosure available on request and the written summary of consumer rights, and 1681d(a)(2) requires the employer to certify to the agency that it made those disclosures and will comply with what comes next. What comes next is the second clock: under 1681d(b), on the applicant’s written request made within a reasonable period after that notice, the employer must make “a complete and accurate disclosure of the nature and scope of the investigation requested”, “not later than five days after the date on which the request for such disclosure was received from the consumer or such report was first requested, whichever is the later.” Five days, not five business days – and the duty falls on the employer, not the agency.

Section 1681d(d), headed Prohibitions, then binds the agency. Its public-record paragraph opens “Except as otherwise provided in section 1681k of this title”, and then bars an item of public record about “an arrest, indictment, conviction, civil judicial action, tax lien, or outstanding judgment” “unless the agency has verified the accuracy of the information during the 30-day period ending on the date on which the report is furnished.” Adverse information from an interview cannot go in on one person’s say-so: the agency must have “followed reasonable procedures to obtain confirmation of the information, from an additional source that has independent and direct knowledge of the information”, unless the person interviewed is the best possible source. And it may not make an inquiry that would violate applicable equal employment opportunity law if the employer made it directly – the employer’s own certification, pointed the other way.

The public-record rule written for employment

A whole section of the Act exists for this use. 15 U.S.C. 1681k(a) applies to “a consumer reporting agency which furnishes a consumer report for employment purposes and which for that purpose compiles and reports items of information on consumers which are matters of public record and are likely to have an adverse effect upon a consumer’s ability to obtain employment”. It then gives a genuine either/or – the statute uses “or”. The agency must either notify the person that the public-record information is being reported, at the time it reports it, or “maintain strict procedures designed to insure that whenever public record information which is likely to have an adverse effect on a consumer’s ability to obtain employment is reported it is complete and up to date.” For the strict-procedures limb only, the section defines its own term: items relating to arrests, indictments, convictions, suits, tax liens and outstanding judgments are up to date if the current public record status of the item at the time of the report is reported. A national-security exemption sits at 1681k(b). Where those records live is the subject of our page on criminal record research.