New FCRA Forms Required Effective January 1, 2013January 2013 – Employment Alert
Effective January 1, 2013, employers are required to use the revised Summary of Rights form issued by the Consumer Financial Protection Board (“CFPB”) to conduct background checks on applicants or employees under the Federal Credit Reporting Act (“FCRA”). The revised form makes it clear that the CFPB, not the Federal Trade Commission (“FTC”), is the agency that employees should now contact about their rights under the FCRA.
The FCRA is a federal law that imposes certain requirements on employers who use third-party Consumer Reporting Agencies (“CRA”) that perform background checks on applicants and employees. Pursuant to the FCRA, an employer is required to provide a disclosure and obtain written authorization from any applicant or employee prior to obtaining consumer and/or investigative reports. Employers are also required to notify the applicant or employee prior to taking an adverse action (i.e. denial of employment, failure to promote, termination) against the applicant or employee based on the information contained in the report(s) and must provide the applicant or employee a copy of the report(s) and a Summary of Your Rights under the FCRA ("Summary of Rights") form under the FCRA. It is this Summary of Rights form that has been revised by the CFPB and which employers must begin using by January 1, 2013.
Previously, the FTC had been the agency responsible for interpreting the FCRA. However, with the passage of the Consumer Protection Act of 2010, the enforcement powers over the FCRA were transferred to the newly created CFPB. The CFPB has now become the agency primarily responsible for interpreting the FCRA.
A copy of the revised Summary of Rights form, which employers must use effective January 1, 2013, can be downloaded from the CFPB's website at: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre35.pdf.
The Wage Theft Prevention Act (“WTPA”), applicable to all employers in New York, requires you to provide employees with an annual notice regarding their compensation and other terms of employment. The notice must be provided to all employees between January 1 and February 1 of each year, regardless if they previously received a notice. Employers who fail to give proper notice could face damages of up to $50 per week, per employee.
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