The process of hiring a new employee is an important decision for an organization. In addition to interviewing the candidate, employers often make use of investigative consumer reports to provide more thorough information and to verify credentials. The reports are ordered from private firms that obtain them for the companies. To protect the rights of the job candidate, employers must comply with federal employment regulations when using information from the reports.

Function

Investigative consumer reports are most commonly used by employers as part of a background check for job candidates. The candidate typically gives the company the consent to order the reports by filling out and signing the pertinent section of the job application. Employees generally will only order the reports if they are seriously considering a candidate for employment.

Types

Several types of reports are used by employers. For example, a credit report indicates the applicant's credit history and whether she has filed for bankruptcy. A criminal background check tells where the applicant has been in prison or committed any crimes. An investigative consumer report provides information about the applicant's reputation and character. A motor vehicle report indicates the applicant's driving history.

Significance

Information from investigative consumer reports can play a big role in determining whether the applicant is hired. If the job involves driving a company vehicle and the motor vehicle report shows that the applicant was convicted of DUI two years ago, it may disqualify the applicant from being hired. Likewise, if the credit report shows that the applicant had filed for bankruptcy and the job involves handing company funds, this could also exclude the applicant from further consideration.

Considerations

When using information from consumer reports, employers must maintain compliance with the Fair Credit Reporting Act (FCRA). The FCRA mandates that if an employer takes adverse action as the result of information found on the report, such as denying a job or promotion, the individual must first give him a copy of the report that was used as well as a copy of the "A Summary of Your Rights Under the Fair Credit Reporting Act" document. After the adverse action is taken, the employer must also give written, verbal, written or electronic notice indicating that the action has been taken.

Warning

Employers who don't gain the applicant's permission to order investigative consumer reports or don't follow the notification procedures can face harsh consequences. The individual is permitted to file a federal lawsuit, and may be entitled to receive punitive damages. Agencies such as the Federal Trade Commission may also file suit.