Modified "Summary of Rights" goes into effect January 1, 2013

The entire focus here is on wording which modifies whose authority governs the notice process..... Our forms within the system will be in full compliance as of the effective date, 1-1-2013 For our clients that  handle their own notice and disclosure, you will be required to make the changes regarding the governing body, should the consumer want to contact them.  ( CFPB V FTC )
 According to regulations from the Consumer Financial Protection Bureau (CFP, three essential forms mandated by the federal Fair Credit Reporting Act (FCRA) used in the background screening process must be modified by January 1, 2013. The forms must be changed to reflect that consumers can obtain information about their rights under the FCRA from the CFPB instead of the Federal Trade Commission (FTC). The three forms in use currently indicate that the FTC is the agency consumers can contact with questions.
The three forms at issue are:

• Summary of Consumer Rights under the FCRA
• Notice to Users of Consumer Reports of their Obligations under the 
• Notice to Furnishers of Information of their Obligations under the FCRA

Each of the three notices is mandated for use in certain situations under the Fair Credit Reporting Act:

• The “Summary of Consumer Rights under the FCRA” is a notice that a background screening firm must provide to an employer and employers in turn must provide the notice to applicants in different situations.
• The FCRA also mandates that a background screening firm (known as a Consumer Reporting Agency or “CRA”) must provide each user of its services the “Notice to Users of Consumer Reports of their Obligations under the FCRA.”
• The “Notice to Furnishers of Information of their Obligations under the FCRA” is aimed at certain furnishers of information to CRAs and must be provided in prescribed situations such as a re-investigation where the consumer disputes the report or in a situation involving identity theft.

The changes are the result of the creation of the CFPB as part of the Dodd–Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111-203, H.R. 4173) that was signed into law by President Barack Obama on July 21, 2010. The CFPB has rule making and enforcement powers over the FCRA. However, the CFPB does not have supervisory power over background screening firms. Congress specifically exempted background screening firms from being supervised by the CFPB since a background check report is not a financial product. The result may be some confusion as the CFPB and FTC determine which agency will perform which tasks.
The primary difference is that instead of listing the FTC contact information, the CFPB contact information is utilized in the form.

Click here to get a copy of the new "FCRA-Summary of Rights 2013"

Dollar General Next on the List for the EEOC

According to Dollar Generals latest 10Q, they are being investigated by the EEOC regarding their Background Screening Policy and how they use criminal records in hiring. The EEOC has alleged that Dollar General has discriminated against minorities for the way they apply their policy against applicants with criminal records.

Although the complaint has not been settled, it will be a long and arduous process to resolve this matter with the EEOC. 

All companies should review their employment screening policy and process to adhere to the "New Guidelines" published by the EEOC.  

Indiana to Restrict Use of Criminal Records

The State of Indiana recently passed a law that prohibits the use of certain criminal records.   The new law Indiana House Bill 1033 limits the use of what Employers may obtain from an applicant, what a "consumer reporting agency" (CRA) may obtain from the state courts and what a CRA can report to employers. 

Effective July 1, 2012, the prohibits courts from disclosing information on alleged infractions where the records is:

• is not prosecuted or if the action against the person is dismissed;
• is adjudged not to have committed the infraction; or
• is adjudged to have committed the infraction and the adjudication is subsequently vacated;
• was convicted of the infraction and satisfied any judgement attendant to the infraction conviction more than five years ago.
• the court in which the action was filed shall order the clerk not to disclose or permit disclosure of information related to the infraction to a noncriminal justice organization or an individual.

The bill also contains additional requirements that take effect on July 1, 2013.  We will send out more information on these new requirements as we move closer to the effective date.

Vermont Joins Growing Number of States Restricting Use of Credit Checks for Employment Purposes

Effective July 1, 2012, Vermont joins California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Washington, as jurisdictions which restrict an employer’s right to obtain and use credit information for making employment decisions.

Under this new law, a Vermont employer may not inquire about or use an applicant or employee’s credit report or credit history with respect to employment, compensation, or a term, condition, or privilege of employment unless: 1. The information is required by state or federal law or regulation; 2. The position being sought or held involves access to confidential financial information (defined as sensitive financial information of commercial value that a customer or client of the employer gives explicit authorization for the employer to obtain, process, and store and that the employer entrusts only to managers or employees as a necessary function of their job duties); 3. The employer is a financial institution as defined in 8 V.S.A.§ 11101(32) or a credit union as defined in 8 V.S.A. § 30101(5);  4. The position being sought or held is that of a law enforcement officer as defined in 20 V.S.A. § 2358, emergency medical personnel as defined in 24 V.S.A. § 2651(6), or a firefighter as defined in 20 V.S.A. § 3151(3); 5. The position being sought or held requires a financial fiduciary responsibility to the employer or a client of the employer, including the authority to issue payments, collect debts, transfer money, or enter into contracts; 6. The employer can demonstrate that the information is a valid and reliable predictor of employee performance in the specific position being sought or held;  and/or 7. The position being sought or held involves access to an employer’s payroll information.  However, even if an employer can avail itself of one of these exemptions, the applicant or employee’s credit report or history may not be the sole factor in decisions regarding employment, compensation, or a term, condition, or privilege of employment.

If an employer is lawfully permitted to obtain credit history, the employer must: 1. Obtain the employee’s or applicant’s written consent each time the employer seeks to obtain the employee’s or applicant’s credit report; and 2.  Disclose in writing to the employee or applicant the employer’s reasons for accessing the credit report, and if an adverse employment action is taken based upon the credit report, disclose the reasons for the action in writing. The employee or applicant has the right to contest the accuracy of the credit report or credit history.

Vermont employers who conduct credit checks must closely review this statute to ensure that information is only obtained where permitted by law and that all necessary disclosures are provided to applicants and employees.   Further, even if an exemption is applicable, a Vermont employer must not base any employment decisions solely on credit history.

Feel free as always to direct any questions on the appropriate use of Credit Reports to compliance@s2verify.com

EEOC Issues Enforcement Guidance On the Use of Arrest and Criminal Conviction Record in Employment Screening

The EEOC issued their Enforcement Guidance today, April 25, 2012, on how arrest and criminal conviction records can and should be used by employers with regards to hiring.  

The guidance document can be found at www.eeoc.gov/laws/guidance/arrest_conviction.cfm.

We encourage you to please take the time to read this document.  Should you have questions, please feel free to reach out to us at anytime for further discussion.

Background Checks & Credit Reports

 On March 13th, Commissioner Victoria Lipnic of the Equal Employment Opportunity Commission (EEOC) spoke at an event on "Due Diligence, Background Checks and Employment: Protecting the Safety of Employees, Customers and At-Risk Populations." Lipnic stated that the EEOC is "likely" to issue new guidance to employers on the use of both criminal history and credit background checks in the near future.

Regarding criminal history, Lipnic noted that the EEOC was unlikely to establish a strict rule about the specific period of time after which a conviction could no longer be considered in making employment decisions. Lipnic, however, cautioned that employers should avoid "blanket" bans on hiring individuals with criminal convictions as such bans could have a disparate impact on certain minority groups.

The event was hosted by the National Association of Professional Background Screeners, the Consumer Data Industry Association, and the U.S. Chamber of Commerce.

(http://www.eeoc.gov/eeoc/lipnic.cfm)

FTC Issues Employers Guidance for FCRA

The Federal Trade Commission (FTC) issued Employers Guidance for the use of Consumer Reports. 

While this information is not new, the Guidance is another step by the Federal Government, both the FTC and EEOC, to ensure that companies are following the Fair Credit Reporting Act(FCRA).

Please review these brief guidelines to ensure your company is in compliance.