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S P R I N G

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2014

the provisions of the Fair Credit Reporting Act, (FCRA).

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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.

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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

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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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