On December 7, 2012, the Federal Trade Commission (the “FTC”), submitted its written testimony to the U.S. Civil Rights Commission on the use of criminal background checks in employment decisions. The Commission intends to apply the testimony in reviewing the EEOC’s guidance that an employer’s use of an individual’s criminal history in making employment decisions may, in some instances, violate the prohibition against employment discrimination under Title VII of the Civil Rights Act of 1964. The EEOC suggests that minorities are disproportionately likely to have criminal records, which means that when employers use criminal background reports, minorities are possibly affected more than other groups.
Notably, in its testimony, the FTC, which shares the authority for enforcing the Fair Credit Reporting Act (“FCRA”) with other federal agencies, including the Consumer Financial Protection Bureau (“CFPB”) does not say anything substantial about civil rights.
The testimony does, however, provide a good recap of the legal rights and obligations prescribed by the FCRA when consumer reports are used for employment purposes, and highlights the FTC’s law enforcement efforts in this area. As its starting point, the testimony reminds that the FCRA imposes several requirements on consumer reporting agencies (“CRAs”) that provide consumer reports to employers, which include ensuring that the employer is in fact using the report for a permissible purpose. In the employment context, permissible purposes are limited to “employment, promotion, reassignment, or retention.” Thus, employers may only obtain a consumer report about applicants or employees, and may not simply use their status as employers to get information about competitors, opposing parties in litigation, or anyone else. Relatedly, under the permissible purpose requirement, CRAs must have reasonable procedures in place to ensure that the consumer report users are who they claim.
The CRAs also must comply with certain procedural requirements, such as giving all users of consumer reports a notice that informs them of their duties under the FCRA. The CRAs must obtain certifications from the employer that: (1) it is in compliance with the FCRA; and (2) it will not use consumer report information in violation of any federal or state equal employment opportunity laws or regulations.
Further, the FCRA mandates that CRAs follow “reasonable procedures to assure maximum possible accuracy of the information