Background checks play a crucial role in peoples' lives, especially in relation to their employment. Whether you are applying for a new job or you are already an employee of a company, more and more employers are conducting background checks. The Fair Credit Reporting Act ("FCRA") is a federal law that protects employees and job applicants from employers conducting background checks without their authorization. Specifically, the FCRA forces employers to comply with strict requirements before they conduct a background check, before they take adverse action, and after they decide to take adverse action. The FCRA makes it unlawful for an employer not to hire a job applicant, fire or fail to promote a current employee based on information obtained in the background check without first satisfying the above-mentioned requirements.

There are two kinds of background checks that the FCRA covers: (1) "consumer reports" and (2) "investigative consumer reports." The "consumer report" includes a credit report and a criminal history report which is obtained through a consumer reporting agency's database. The "investigative consumer report" is when a company obtains information on an employee or job applicant by conducting personal interviews with references, prior employers, and friends and family, to evaluate, among other things, their character, general reputation, personal characteristics, and credit standing. Generally, in order for an employer to conduct a background check on a current employee or job applicant it must first provide proper notice to that employee and get that employee's authorization. The notice must be in a "stand alone" document meaning that no other information can be included except for the employee's authorization. There are other notice requirements if the employer is conducting an investigative consumer report. For instance, an employee must be allowed to request information about the "nature and scope" of the investigation. The FCRA does not require any negative information to be contained in the background report; the fact that the employer conducted a background search without the proper notice and/or employee's authorization is unlawful by itself.

If an employer decides not to hire a job applicant or to fire or not promote a current employee based on any information revealed during the background check, the employer must provide that employee a copy of the background report and a copy of the Summary of Rights under the FCRA. This enables the employee to check the accuracy of the information. Furthermore, an employer must wait a "reasonable" amount of time before they take the adverse action. Finally, if the employer does fire or does not hire an employee the employer must provide that employee with several notices such as the name of the consumer reporting agency that provided the report.

An employer's failure to meet any of these strict requirements can result in liability. Generally, the FCRA covers employees within the last five years from the date of the violation. If you applied for a job and the employer ran your credit report or checked your criminal history without proper notification and authorization and/or you were fired or not hired because of information revealed after a background report was obtained, you may be entitled to monetary damages. The FCRA provides actual damages or statutory damages (ranging between $100 and $1,000), punitive damages, and attorneys' fees and costs.