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What are FCRA Requirements for Employers?

Updated: Sep 14, 2023

The Fair Credit Reporting Act (FCRA) is the federal law that regulates the use of consumer reports, including background checks. But the FCRA doesn’t just regulate the Consumer Reporting Agency (CRA), the entity conducting the background check, it also applies to the End-User – that’s you! There are three basic duties owed by end-users of consumer reports.

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Employer Responsibilities:

1. Provide certification to the CRA. You must certify your identity and permissible purpose under the FCRA for requesting background checks and that you will use the information for that purpose only. This is generally done at the time you sign an agreement with your provider and may be required with each order you place by selecting or acknowledging your permissible purpose.

2. Make disclosure to and obtain authorization from the consumer. You must provide disclosure to the consumer (your candidate) stating that a consumer report will be obtained for employment purposes and obtain authorization from the candidate. The FCRA language for this requirement is brief and seemingly simple but loaded with potential liability. There are specific requirements for consumer disclosures, and FCRA claims for disclosure violations have been on the rise. High-dollar judgments for violations of the FCRA notice provisions highlight the need for employers to take a close look at the forms being used. Most screening companies offer FCRA compliant sample forms which can be used. Use them and think simple! Don’t try to customize these, add additional language, or brand them – keep them simple to ensure compliance. It’s a good idea to have legal counsel familiar with the FCRA review your forms, as these forms are ultimately the responsibility of the end-user.

3. Comply with adverse action requirements. End-users must comply with adverse action requirements under the FCRA. The candidates must be notified, through a pre-adverse action letter, that you are considering making a hiring decision based in whole or in part on information in the background check. If the employer decides not to hire a candidate, the individual must also receive an adverse action notice explaining that a final hiring decision was made as a result of information obtained through the background check. Keep in mind that this process is required for all employment decisions where a background check is conducted – hiring, retention, promotion, and termination.

Make sure you are also familiar with your state and local laws related to consumer reports which may impact the adverse action process in your location. For example, Washington has an additional disclosure form that must be given to applicants with the pre-adverse action letter. Many locations have also passed fair chance hiring laws, also known as ban-the-box laws, which can impose additional requirements for adverse action letters. For instance, Seattle employers must list the specific items from the background check that are being considered. The adverse action responsibility rests with the employer, not the screening provider. But look to your provider for sample forms that ensure compliance.

These are the formal FCRA responsibilities of employers. But employers have a greater responsibility in the background check process. Make sure you know what’s included in your background checks and what kind of information you can consider.


Sabrina Sawyer is the CEO of Integris and the VP of HR and Business Solutions at Associated Industries, a premier employer association located in Spokane, WA.

The information provided is not intended to constitute legal advice and is for informational purposes only. Employers are strongly advised to consult with legal counsel on matters related to the Fair Credit Reporting Act.


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