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Employers Should Share All Background Check Reports Before Revoking Job Offers

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A federal judge ruled an employer did not comply with requirements of the Fair Credit Reporting Act (FCRA) when it failed to send a rejected candidate a final background check report and required notices.

The plaintiff was offered a job as a maintenance technician at Mt. Laurel Crossing Apartments, a residential community owned by Lincoln Property Company, headquartered in Dallas. The job offer was contingent on the results of a criminal background check and drug screen.

Lincoln received an initial, in-progress report from a background screening firm showing a misdemeanor conviction for driving under the influence and two separate drug-related felony convictions. Records show that a cover letter, a copy of the report and a summary of rights under the FCRA were sent to the plaintiff at this time. A week later, a more comprehensive, final report was provided to Lincoln, containing the same criminal history information as well as additional information such as credit history results. Lincoln then sent the plaintiff a letter, revoking its offer. Lincoln does not dispute that it neglected to send him the final report.

The plaintiff argued that Lincoln violated the FCRA "by taking adverse employment action against [him] based on a consumer report, without first providing [him] with a copy of the pertinent consumer report" and by failing to provide him with time to contest the report before an adverse decision was taken.

[SHRM members-only toolkit: Conducting Background Investigations]

"The FCRA requires that an employer provide job applicants with their background report, summary of rights, and a 'real opportunity' to contest the contents of the background report before the employer relies on the report to take an adverse action against the applicant," wrote U.S. District Judge Gene E.K. Pratter, the judge in the case before the U.S. District Court for the Eastern District of Pennsylvania.

While the amount of time an employer must provide an applicant to contest a report prior to taking adverse action is not specified under the FCRA, Congress has focused on a five-day minimum and eight days as a "reasonable period," Pratter added.

Lincoln decided to revoke the offer of employment based on the plaintiff's felony convictions. The company argued that there are no material differences between the criminal history included in the earlier report and the subsequent final report.

"Lincoln may have decided conclusively to revoke the offer of employment based on Mr. Wright's felony convictions, but Mr. Wright remained unable to contest the full information upon which Lincoln relied even if he indeed received the [earlier] transmittal, given that it only included his criminal history," Pratter wrote in the court's opinion.

The court denied Lincoln's motion for summary judgment and concluded that a jury should resolve the dispute.

"The court's ruling does not equate to a blanket requirement that an employer provide all copies of background reports to rejected job applicants or terminated employees," said Pamela Devata, a partner in the Chicago office of Seyfarth Shaw. "It is possible the jury will find that, under these facts, a second pre-adverse action notice was not required. That said, employers that receive corrected or more comprehensive reports after sending the initial report should assess the new report to determine whether to send a subsequent pre-adverse action notice."

The fact that the two reports contained the same conviction information on which the job offer was revoked didn't spare the employer from the expense and burden of a jury trial, she added.

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