FCRA Compliance and the Genesis Healthcare Case
The Fair Credit Reporting Act (FCRA) is a federal law that regulates the collection dissemination, and use of consumer information, including background checks and credit reporting. Over the past year, there has been a “swelling tide” of FCRA litigation against employers for improper use of background checks. Earlier this month, Genesis Healthcare, one of the largest nursing home chains in America, was sued for using background checks in a way that violates the FCRA. While background checks can be a risk mitigation tool in protecting a healthcare organization’s patients and staff, not following the proper protocol can have costly consequences for the employer.
Let’s take a look at the recent Genesis Healthcare case and what employers can learn from this case.
Ramos v. Genesis Healthcare: The Claims
In July 2014, Genesis Healthcare hired the plaintiff, Doris Ramos, to work as an occupational therapist but rescinded the job offer after a background check. Ramos claims that Genesis never provided her with a copy of the background report or a statement of her rights. Ramos also claims that the background check inaccurately stated she had a felony conviction. Therefore, she also filed an individual complaint against Genesis’ background check provider. Ramos’ complaints concern the FCRA’s adverse action requirements and obligations for employers.
The Importance of a Compliant Adverse Action Process
The main takeaway from the Genesis case is that employers should adhere to the FCRA’s requirements regarding an adverse action process. But what exactly does a compliant process look like? The Federal Trade Commission (FTC), who enforces the FCRA, published an article on their website that is a great read for employers. The FCRA has requirements both before and after taking an adverse action.
Before rejecting a job application, reassigning or terminating an employee, denying a promotion, or taking any other adverse employment action based on information in a consumer report, the FCRA requires that employers provide the applicant or employee with the following:
- a notice that includes a copy of the consumer report relied on to make a decision
- a copy of A Summary of Your Rights Under the Fair Credit Reporting Act
In the Genesis case, Ramos claimed that the employer never provided her with either of these documents. The purpose of providing an applicant with the notice in advance is to give them the opportunity to review the background check report and notify the employer if it is correct.
“Providing a copy of the criminal background report as well as a statement of consumer rights before making a final adverse employment decision arms the nation’s millions of job applicants with the knowledge and information needed to challenge inaccurate, incomplete, and misleading public-records-based reports,” Ramos states.
After taking an adverse action, the FCRA requires employers like Genesis Healthcare to provide the applicant or employee with a notice of the decision—orally, in writing, or electronically. An adverse action notice must include:
- the name, address, and phone number of the consumer reporting company that supplied the report
- a statement that the company that supplied the report did not make the decision to take the unfavorable action and can’t give specific reasons for it
- a notice of the applicant or employee’s right to dispute the accuracy or completeness of any information the consumer reporting company furnished, and to get an additional free report from the company if the person asks for it within 60 days
Employers should review the FCRA’s requirements before conducting employment background checks to ensure their practices comply with the federal law. With the upward trend in FCRA litigation we’ve seen in 2014, having a compliant background check process, including an adverse action process, is critical.