Credit Checks

Some employers believe that credit checks are an important part of investigating job applicants or employees seeking promotions. Commentators have suggested that the use of credit checks could have a disparate impact on protected classes and constitute illegal discrimination. A Court has held that use of a credit report to evaluate an applicant for employment is not a discriminatory employment practice and is authorized by the Fair Credit Reporting Act (FCRA). Pettus v. TRW Consumer Credit Service, 49 F.3d 728 (5th Cir. 1995).

In Wiggins v. Philip Morris, 853 F. Supp. 470 (D.D.C. 1994), the court held that it is not discriminatory for an employer to obtain a credit report for purposes of evaluating whether to discharge an employee.

Employers wishing to utilize credit checks must exercise caution because amendments to the FCRA, 15 U.S.C. 1681­-1681(t) (effective Sept. 30. 1997), now regulate an employer's access to and use of credit checks. Under these regulations, an employer must provide a "clear and conspicuous disclosure" made in writing to the consumer (employee) before the report is procured, in a document that consists solely of the disclosure that a report may be obtained for employment purposes and the employee has authorized in writing the procurement of the report. Before taking an adverse action based in whole or in part on the report, the employer must provide the employee with a copy of the report and description of the consumer's rights, as prescribed by the Federal Trade Commission. In addition, the employer must certify to the consumer reporting agency that the employer has complied with statute dealing with disclosure to the employee. The consumer reporting agency must provide the agency with a summary of the consumer's rights along with a copy of the report. There is also a difference between a consumer report and an investigative consumer report. Investigative reports include information as to a consumer's character, general reputation, personal characteristics and mode of living, In this case, a report may not be procured unless disclosed to the consumer in a writing mailed not later than 3 days after the date on which the report was first requested and includes a statement informing consumer of his right to request additional disclosures and written summary of his rights. 15 U.S.C. 1681(d). The regulations also require an employer to follow applicable FCRA regulations and equal employment opportunity laws and regulations.