Tcl - Preventing Identity Theft: Must Employers Shred Employee Background Reports? - November 2005 - Law Practice Management
| Publication year | 2005 |
| Pages | 101 |
| Citation | Vol. 34 No. 11 Pg. 101 |
2005, November, Pg. 101. TCL - Preventing Identity Theft: Must Employers Shred Employee Background Reports? - November 2005 - Law Practice Management
November 2005
Vol. 34, No. 11 [Page 101]
Law Practice Management
Preventing Identity Theft: Must Employers Shred Employee Background Reports?
by Paul J. McCue
Paul J. McCue, Denver, is a member of Sherman & Howard, LLC, where he counsels and defends employers in all aspects of employment law - (303) 299-8070, pmccue@sah.com.
Employers conducting background checks on job applicants and current employees must now comply with a new regulation that is part of a federal initiative to prevent identity theft under the Fair Credit Reporting Act ("FCRA").1 Unlike the longstanding FCRA requirements that deal with the mandatory disclosures to job applicants and employees, the new federal rule governs how employers should dispose of the information obtained in employee background reports. This regulation, which took effect on June 1, 2005, requires all employers to shred or otherwise effectively destroy information obtained on applicants and employees.
This article reviews the existing requirements under the FCRA for conducting background checks on employees and penalties for violations of the FCRA. It also describes the new regulation concerning disposal of information and offers practical tips for complying with the new regulation.
General Requirements of the FCRA
Employers might have a variety of reasons for seeking a report concerning the background of a job applicant or a current employee. For example, an employer might want to know the financial status of an employee who controls or has spending authority over large amounts of money or, more typically, employers want to be sure an applicant does not have a criminal record. If handled properly, background checks on employees can assist employers, including law firms, in their decision-making and minimize the risk of negligent hiring or negligent retention claims.
Although the FCRA repeatedly refers to "consumers,"2 that term is defined to mean any "individual."3 The law specifically governs "background reports" obtained for employment purposes, which are defined as reports "used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee."4 One of the permissible purposes for which a reporting agency can lawfully furnish a report to a third party is that it believes the report will be used for employment purposes.5
There are two types of consumer reports, and they have different disclosure requirements. The first type is a general "consumer report" that contains information, either written or oral, obtained from a reporting agency bearing on an individual's creditworthiness, character, general reputation, personal characteristics, or mode of living.6 The second type of report defined in the FCRA is an "investigative consumer report," which also contains information that reflects on an individual's character, general reputation, personal characteristics, or mode of living. However, the investigative consumer report differs from the consumer report in that it includes information gathered from personal interviews with neighbors, friends, associates, or "others with whom he is acquainted or who may have knowledge concerning" the individual.7
Disclosure Requirements
The FCRA mandates that an employer comply with the following procedures for obtaining and...
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