Fair Credit Reporting Act
Employers that use investigators or agencies like Oxford Document
Management (ODM) to conduct background checks on prospective or
current paid employees are required to comply with the notice and
disclosure requirements of the federal Fair Credit Reporting Act
(FCRA). Though a strong argument can be made that the FCRA does
not apply to churches or other religious organizations on the basis
of the free exercise clause of the First Amendment of the U.S. Constitution,
we recommend that you get an opinion from your legal counsel.
The FCRA regulates the collection, storage and sale of personal
information including, but not limited to, criminal history records,
driving records, worker's compensation reports, educational credentials,
credit history checks and employer reference checks for employment-related
and other purposes. Under the FCRA, background investigation reports
that include this personal information are an "investigative
consumer report" (hereafter referred to as "Report")
and the organization that collects or assembles this information
for the benefit of a third party for a fee is called a "consumer
reporting agency" (i.e. ODM). For a complete text of the FCRA,
please visit the Federal Trade Commission website at
There are significant penalties for noncompliance with the FCRA.
Under Section 617, if the FTC finds "negligent noncompliance"
with FCRA requirements, violators are liable to an applicant or
employee for actual damages, costs of a suit, and attorney's fees.
In addition, an employer's "willful noncompliance," may
result in fines of up to $1,000 per violation, as well as punitive
damages. Criminal penalties also may be imposed if a person obtains
a credit report under false pretenses, including fines and/or up
to two years imprisonment.
Given the tremendous importance of this topic, we recommend that
you print this material for your future reference.
The extent to which you will deal directly with the notice and disclosure
requirements of the FCRA will depend on the online features you
ODM Makes Complying With the Fair Credit Report Act Simple
The steps required to comply with the FCRA are easily incorporated
into our online screening process:
Employer-User Certification Required (FCRA Section 604).
Prior to obtaining an investigative consumer report from a consumer
reporting agency, the employer must first provide certification
to the consumer reporting agency that the employer:
- Is requesting the report for employment purposes (which includes
evaluating an applicant or employee for employment, promotion,
reassignment, or retention as an employee).
- Has provided the required disclosure to the applicant or employee.
- Has obtained the necessary written authorization to request
- Will provide the applicant or employee with a copy of the report
and a written description of the applicant or employee's rights
before taking any "adverse action" based in whole or
in part on the report.
- Will not use the information from the report in a manner that
violates federal or state equal opportunity laws. Many of these
certifications are part of the "User Agreement" you
agree to abide by. The remaining disclosure and notice responsibilities
are managed as follows:
Disclosure/Authorization: The FCRA requires any employer
intending to obtain a Report to first make a clear and conspicuous
written Disclosure to the prospective or current employee that a
Report may be obtained for employment purposes (FCRA Sections 604
and 606). The Disclosure must be provided in a standalone document
and cannot be included in an employment application or other document
that contains additional information. The employer must also obtain
the prospective or current employee's Authorization before obtaining
ODM obtains the combined Disclosure/Authorization from your
subject during our online screening process. If you choose not
to utilize our online process, you will need to obtain a completed
Disclosure/Authorization from your applicants before requesting
our services. Maintain this important document in your permanent
files. See Sample Disclosure.
Adverse Action Notices: In the event an employer
intends to take any "adverse action" based in whole or
in part upon information contained in a Report, the FCRA requires
the employer to make certain notifications to the applicant or employee
(FCRA Section 604). For employment purposes, an "adverse action"
means either: 1) a denial of employment; or 2) any other decision
for employment purposes that adversely affects any current or prospective
employee. The FCRA requires an employer to provide a copy of the
Report to the applicant or employee along with a copy of his/her
rights under the FCRA (the Summary of Your
Rights Under the FCRA) before taking adverse action based upon
information contained in the Report. The purpose is to give them
the opportunity to see the Report that contains information that
is being used against them. If the Report is inaccurate or incomplete,
the applicant then has the opportunity to contact the parties involved
to dispute or explain what is in the Report. Otherwise, they may
be denied employment without ever knowing they were the victims
of inaccurate or incomplete data. Give the individual a "reasonable"
amount of time in which to respond. We call this letter the Pre-Adverse
You can order or create this Letter in the future via our
website by logging into the "Member Log-In" area using
your Church Client Number and Password. Here you will have the
option of having ODM prepare and mail this Letter (with enclosure)
on your behalf for a $15.00 fee, or you can link to the sample
Letter we've provided to assist you in preparing this Letter on
your own. See "Sample Pre-Adverse
After the decision is made to decline employment or terminate an
employee based in whole or in part upon information contained in
a Report, the FCRA requires that the employer must provide the applicant
or employee with an additional notice that includes: (We call this
notice the Adverse Action Notice.)
- The name, address, and telephone number of the consumer reporting
agency issuing the report
- A statement that the consumer reporting agency did not make
the adverse decision and is not able to explain why the adverse
decision was made
- A statement regarding the applicant or employee's right to
obtain a free disclosure of the applicant or employee's file from
the agency if the applicant or employee requests the report within
60 days of notice of the adverse action
- A statement regarding the applicant or employee's right to
dispute directly with the consumer reporting agency the accuracy
or completeness of any information provided by the agency.
You can also order or create this Notice in the future via
our website by logging into the "Member Log-In" area
using your Church Client Number and Password. Here you will
have the option of having ODM prepare and mail this Notice (with
enclosure) on your behalf for a $15.00 fee, or you can link
to the sample Notice we have provided to assist you in preparing
this Notice on your own. See Sample
Adverse Action Notice.