Two companies that fired workers and rejected job applicants based on background checks without informing those people of their rights have settled with the Federal Trade Commission for $77,000 in civil penalties.
The companies -- Quality Terminal Services and Rail Terminal Services -- were charged with violating provisions oaf the Fair Credit Reporting Act (FCRA) which requires employers to get permission to look at individual credit reports. If you don't get a job because of information in your report, the employer must show you the report and tell you how to get a copy from the consumer reporting company. There is no charge for the report if you request it within 60 days of getting notice that you did not get a job.
Employers are conducting job applicant and employee background checks and looking more frequently at credit records, criminal histories and other background information from a consumer reporting agencies lawsuits of this type are bound to grow exponentially.
For better, or worse in many cases, employers are running credit checks on candidates and it's no longer just for positions with access to money such as cashiers, tellers and financial professionals. A report on LongIslandPress.com, said more than 40% of employers are running pre-hire credit reports as part of their due diligence process. Some companies believe they can deduce how a person will handle their job responsibilities based on how they handle their personal finances. Others use the information to gauge how long a person might stay in a position if their debt load is higher than a position pays. It is also used to verify employment history and a social security number, the report stated.
In this case, the FTC said both defendants, who hire workers for railway and other transportation services, contracted with a consumer reporting agency to conduct background checks including criminal record reviews for employees and job applicants, and made hiring and firing decisions based on those background checks. The companies allegedly failed to provide the employees and applicants with pre-adverse action notices and adverse action notices as required by the FCRA.
The settlements require Quality Terminal Services and Rail Terminal Services, LLC to pay $53,000 and $24,000 in civil penalties, respectively, and to provide the FCRA-required notices in the future. The settlements also contain record-keeping and reporting provisions to let the FTC monitor compliance.
In a statement filed with the FTC recently Internet watchdogs at the Center for Democracy and Technology (CDT) said of this case and others: As the use of background checks increase, similar problems are likely widespread and existing examples have been reported to the Privacy Rights Clearinghouse and the National Employment Law Project, and documented in the press. Reports have been received from employees of industries and organizations that use criminal history background as a part of employment proceedings.
Background checks can go too far. The Ninth Circuit Court of Appeals ruled recently against the federal government and in favor of employees at NASA's Jet Propulsion Laboratory in their case which centers on background investigations known as Homeland Security Presidential Directive #12. The finding reaffirms the JPL employees' claims' that the checks threaten their constitutional rights.
The stink stemmed from HSPD #12 which is in part aimed at gathering information to develop a common identification standard that ensures that people are who they say they are, so government facilities and sensitive information stored in networks remains protected. HSPD#12 requires agencies to issue smart cards to federal employees and contractors.
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