There is a specific law that says how and when an employer or potential employer can do a background check on you. The law also says what the employer can and can’t do with the information it gathers. Several large employers have recently been sued for violating this law, prompting multi-million dollar settlements with the employees and potential employees who were affected.

The law is called the Fair Credit Reporting Act, or FCRA. The rules on background checks apply to job applicants and current employees. There are a couple of important aspects to this law. One is that you must be given notice of any background check. Another important aspect is that the employer can’t penalize you for what the report contains without taking some very specific steps. The law protects applicants and employees when it comes to criminal background checks as well as consumer credit checks.

Under FCRA, a job applicant or employee must consent to a background check, in writing. In order for this to happen, the applicant or employee must be given a written disclosure. This disclosure is required to be “clear and conspicuous,” which means, for example, that it shouldn’t be buried in an employment application that contains a lot of extra or irrelevant information.

Next, when a background check is complete, the employer can’t simply fire or refuse to hire that person based on what they find. The employer must first provide the applicant or employee with a copy of the report in question and must tell the applicant or employee that they intend to take adverse action based on that report. And the employer must give the applicant or employee reasonable time to dispute the report. These are very specific steps that are often skipped.

The most obvious type of adverse action in these situations is firing an employee or refusing to hire an applicant based on a report. However, the law protects employees against other types of adverse action, such as getting a demotion or being denied a promotion based on what comes back in a report.

Employers who violate FCRA can be sued for damages, including actual damages, punitive damages and statutory penalties of up to $1,000 per violation. Employees in some cases have joined together in class action lawsuits, in which they sue their employer as a group for FCRA violations. Recent lawsuits have involved Michaels, Whole Foods Market Group Inc., Publix Super Markets Inc., and Dollar General Corp.

If you have questions about a background check that was performed without your consent, or a situation in which you suffered adverse employment action after a background check without getting notice or a chance to dispute the report, feel free to give us a call at (800) 517-1614. We’ll talk to anyone for free about potential legal issues, including whether they might have a claim against their employer for violating this law.  There is no fee for the attorneys we recommend who take on these cases unless they are successful.  And we consider these cases anywhere in the United States.