S P R I N G
the provisions of the Fair Credit Reporting Act, (FCRA).
The individual must sign a valid Authorization &
Disclosure document before the bank requests a
credit report. The Authorization & Disclosure
can include “evergreen” provisions, making
it effective for the tenure of employment.
Additionally, the FCRA includes numerous
specific requirements which must be fol-
lowed. For example, if any adverse employ-
ment action is contemplated based upon the
information contained in the report, certain
pertinent information as specified in the law
must be timely provided to the individual involved
in an adverse action notice.
Recent guidance from the Equal Employment Opportuni-
ty Commission, (EEOC), has focused upon background credit
and criminal investigations as a potential pretext for discrimi-
nation, with deference given to financial institutions.
Additionally, certain States (excluding Virginia), have enacted
legislation limiting the use of such reports in the employment
arena, with deference provided to financial institutions. Many
states and the District of Columbia have pending legislation
which restricts the use of credit or criminal background checks
in employment. Additionally, the proposed “Equal Employ-
ment for All Act” was introduced in the United States Senate
in December, 2013. Its provisions prohibit using credit reports
for employment purposes, with exceptions for positions which
require a security clearance or “when otherwise required by
law”. Employers using such background information in the
employment arena will be wise to develop and consistently
apply credit and criminal background standards for applicants
and employees, including periodic review of employee credit
and criminal histories. These standards should be job related
and consistent with business necessity, even in a financial
institution, in order to minimize allegations of discrimination.
The federal Bankruptcy Acts
makes it unlawful for
a private employer to “terminate the employment of, or
discriminate with respect to employment against” a person
solely because that person has sought the protection of federal
bankruptcy law, or has experienced insolvency prior to the
commencement of the action in Bankruptcy court. The focus
of this provision of the Act is to assure that the bankrupt
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