Employer background checks: Protection? -- Page 2

• Department of Motor Vehicles. Your driving record may be checked whether the job requires driving or not. It's an easy way to verify date of birth and addresses. "A driving record," says Rosen, "is a true statewide criminal record of that particular state, and it might reveal some level of responsibility. It might not matter if someone made an illegal left turn, but if somebody didn't go to court to deal with it may be suggestive."

Your rights
Background checks are covered by the Fair Credit Reporting Act, which in turn is covered by the Federal Trade Commission. "There is a specific law that covers background checks by third parties, and that law is the FCRA," says Friery. It's the same law that governs the credit reporting industry, but it also covers a number of other kinds of consumer reports, one of which is the employment report."

Among its many provisions, the FCRA gives the following rights to consumers:

1. The request for background checks must be on a separate document. "The provision," says Friery, "must be on a document that's separate from a job application or any other document. So it must stand out, in other words."

2. Pre-adverse action letter. If the applicant is turned down for any reason, they must be given an explanation for the employer's decision. "This is before any action is taken not to hire them," says Friery, "or to fire them, because this also applies to current employers. And along with that comes a statement of rights and a copy of the report."

3. Consent. The FCRA applies only to third-party credit reporting agencies. "In-house checks," says Friery, "are not covered by the FCRA. California does, however, have a requirement that an employer who obtains public record information by way of a 'self' check give the subject an opportunity to receive copies of the public records." This varies from state to state.

4. The FCRA does not address the consequences of refusing consent. "That's because the FCRA imposes specific obligations on employer-users of consumer reports," says Friery, "but there's no room to read more into it than what's required by the words of the law. The FCRA is really more a law about certain types of consumer reports, the companies that prepare such reports and the companies that use them. Employer decision making and discretion are matters generally left to state employment laws -- or Equal Employment Opportunity questions."

Discrimination and obligation
Clearly the laws and regulations governing background checks are a delicate, and sometimes awkward, dance between the Federal Credit Reporting Act, Equal Employment Opportunity laws and nondiscriminatory hiring practices.

"There are some disturbing things about it," says Friery. "For one thing, this really overlaps with employment law and employer's discretion, which is really pretty much unlimited unless the employer runs afoul of discrimination laws. They really are in the position to be able to make job determinations. If they want to adopt a no-tolerance rule for criminal conviction no matter how far back it goes, there's nothing that really says they have to adopt more lenient practices."

And there's something unsettling about the notion that once you agree to allow these checks as a requirement for employment, your employer can follow up on them whenever it wants to. If you're a good employee, why should your employer have the right to check your credit history or driving record from time to time? How is that necessarily relevant to your work performance?

In addition, if a consumer reporting agency makes a mistake and you are not hired as a result, or you are fired as a result, there is not much you can do about it. "Once there is a mistake made," says Friery, "the employer does not have to reinstate a job offer or even take that person back if it resulted in a firing. So the subject really has very little recourse except to try to deal with the consumer reporting agency, the background screener that reported faulty information." You, as a consumer, however, do have a right to have the information corrected.

The laws need some fine-tuning to protect consumers' rights and privacy protections, but there many examples of why background checks are important. And in any case, knowing what's actually in your own credit report can be the first step in understanding what is at stake during a background check.

As Bankrate has reported, Americans can get a free copy of their credit report once a year from each of the three consumer reporting companies -- Equifax, Experian and TransUnion. The companies phased in the program region by region, with the northeastern states finally getting their turn on Sept. 1.