Super Lawyers Magazine
by Elizabeth R. Koller Whittenbury
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This spring the Federal Trade Commission (FTC) issued an opinion letter that requires employers investigating allegations of sexual harassment to comply with the Fair Credit and Reporting Act (FCRA) and that confers on accused employees the same rights as consumers. The advisory letter states that an outside investigator is a “consumer reporting agency” (CRA) and that a report of an investigator’s findings constitutes an “investigative consumer report.” Sexual Harassment Investigations and the Fair Credit Reporting Act, Op. FTC (April 5, 1999).The FCRA defines consumer reporting agency as any person who, for a fee, “assembles or evaluates” credit information or other information on consumers for the purpose of regularly furnishing “consumer reports” to third parties using any means of interstate commerce. The FTC has interpreted that definition to include anyone performing background checks on employees. Outside counsel and independent consultants are considered consumer reporting agencies when they’re asked to conduct investigations into employee misconduct. Consumer reports are defined as reports that include information bearing on an individual’s “character, general reputation, personal characteristics, or mode of living” and that are used or expected to be used for establishing employment eligibility. 15 USC §1681(a). Since reports on employee misconduct usually affect an employee’s eligibility for continued employment, such reports qualify as consumer reports.If an employer seeks a report of an investigation into an employee’s workplace conduct, it must make a written disclosure to the employee and obtain the employee’s written authorization. The employer must make this disclosure by mail or other delivery no later than three days after the date on which the report was first requested. The disclosure must inform the employee of his or her right to make a written request for a complete and accurate disclosure of the nature and scope of the investigation within a reasonable period of time after receiving notice that the employer has requested an investigative consumer report. The employer must disclose the nature and scope of the investigation within five days after receiving the employee’s request for additional disclosure or the date that the report was first requested, whichever is later. 15 USC §1681(d).An employer must also obtain an employee’s written authorization to perform the investigation. A situation may arise in which an employee refuses to authorize an investigation, tying the hands of an employer, who is obligated to investigate allegations of sexual harassment under Title VII. To avoid this, attorneys should counsel their employer-clients to obtain written authorization to investigate claims of misconduct at the point the employee is hired.In compiling the report, outside counsel acting as a CRA must not include adverse information obtained from personal interviews with neighbors, friends, colleagues, or acquaintances of the employee unless the information is confirmed by additional sources who have independent and direct knowledge. An exception exists if a CRA determines that the person interviewed is the best possible source. 15 USC §1681(d).Once the report is completed, a CRA must provide a summary of the employee’s rights under the FCRA either prior to issuing the report or with the report itself. This summary must include, among other information, a statement that the employee may have additional rights under state law, as well as a list of all federal agencies with enforcement responsibilities under the FCRA, should the employee wish to obtain more information. 15 USC §1681(g). Before obtaining a completed report, the employer must certify that it has made the above disclosures and that it will not misuse the information in violation of federal or state equal employment opportunity laws. The employer must also certify that it will furnish a copy of the report and a statement of rights to the employee if the company intends to take adverse action. 15 USC §1681(b). If the employer decides to reassign, terminate, or deny a promotion to an employee, the employer must give a pre–adverse action disclosure that includes a copy of the report and a copy of “A Summary of Your Rights under the Fair Credit Reporting Act”—a document prescribed by the FTC. When furnishing a copy of the report, the employer cannot redact information. 15 USC §1681(b). Outside counsel therefore should carefully write reports to protect the names of witnesses and sources of information relied on for their conclusions. Once adverse action is taken against an employee, the employer must again give notice—this time an adverse action notice—by oral, written, or electronic means. The employer must disclose the name, address, and telephone number of the CRA that furnished the report on the employee, with specific reasons why the action was taken. The notice must also inform the employee of his or her right to obtain a free copy of the report directly from the CRA within 60 days and to dispute the accuracy or completeness of any information. 15 USC §1681(m).
Copyright © 1999. California Lawyer
*Posted with Permission from California Lawyer. This file cannot be downloaded from this page.
California Lawyer’s Definition of reprint permission does not include the downloading,
copying by third parties or any other type of transmission of any posted articles.
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Copyright © 2009 Lisa A. Runquist, Attorney at Law
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