15 U.S.C. 1681b - part 2

Now, to continue our discussion of 15 U.S.C. 1681b - the permissible purposes section of the Fair Credit Reporting Act - I will discuss subsection (b) of 1681b.

"(b) Conditions for Furnishing and Using Consumer Reports for Employment Purposes.

(1) Certification from user. A consumer reporting agency may furnish a consumer report for employment purposes only if

(A) the person who obtains such report from the agency certifies to the agency that

(i) the person has complied with paragraph (2) with respect to the consumer report, and the person will comply with paragraph (3) with respect to the consumer report if paragraph (3) becomes applicable; and

(ii) information from the consumer report will not be used in violation of any applicable Federal or State equal employment opportunity law or regulation; and"

(B) the consumer reporting agency provides with the report, or has previously provided, a summary of the consumer's rights under this title, as prescribed by the Federal Trade Commission under section 609(c)(3) [§ 1681g]."

[In other words, the user (i.e. the person or company receiving the credit report) must certify that he has complied with paragraph 2's requirements to disclose to the consumer that a credit report may be obtained and that the user has written authorization from the consumer to obtain the credit report, and, the user (i.e. the prospective employer) must certify that, if it denies the employment application or the prospective employee suffers some other adverse action as a result of his or her credit report (i.e. paragraph 3), the user will provide a copy of the credit report to the consumer along with a description of his or her rights as a consumer. The user must also certify that the credit report will not be used in violation of any equal employment opportunity law or regulation and must provide a summary of the consumer's rights under the FCRA.]

"(2) Disclosure to Consumer.

(A) In general. Except as provided in subparagraph (B), a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless--

(i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and

(ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person."

[Before a prospective employer (or current employer using a credit report to make a decision about the current employee) may obtain a consumer's credit report to use in an employment decision, the employer must make "clear and conspicuous" disclosure to the consumer in writing that a credit report may be obtained for employment purposes, and must receive written authorization from the consumer for the employer to get the consumer's credit report.]

"(B) Application by mail, telephone, computer, or other similar means. If a consumer described in subparagraph (C) applies for employment by mail, telephone, computer, or other similar means, at any time before a consumer report is procured or caused to be procured in connection with that application--

(i) the person who procures the consumer report on the consumer for employment purposes shall provide to the consumer, by oral, written, or electronic means, notice that a consumer report may be obtained for employment purposes, and a summary of the consumer's rights under section 615(a)(3); and

(ii) the consumer shall have consented, orally, in writing, or electronically to the procurement of the report by that person."

[If the possible employee does not apply in person, the employer must still disclose that a credit report may be obtained, provide a summary of the consumer's rights and get the consumer's consent. However, unlike an in person employment decision, consent may be obtained orally and not just in writing. Also, as you can see from (C) below, this only applies to positions under the Secretary of Transportation's regulations and there has not been any previous in-person contact between consumer and prospective employer.]

"(C) Scope. Subparagraph (B) shall apply to a person procuring a consumer report on a consumer in connection with the consumer's application for employment only if--

(i) the consumer is applying for a position over which the Secretary of Transportation has the power to establish qualifications and maximum hours of service pursuant to the provisions of section 31502 of title 49, or a position subject to safety regulation by a State transportation agency; and

(ii) as of the time at which the person procures the report or causes the report to be procured the only interaction between the consumer and the person in connection with that employment application has been by mail, telephone, computer, or other similar means."

[Told you, (C) limits (B) to applications for positions under the Secretary of Transportation's regulations where there has not been any previous in-person contact between consumer and prospective employer.]

"(3) Conditions on use for adverse actions.

(A) In general. Except as provided in subparagraph (B), in using a consumer report for employment purposes, before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates--

(i) a copy of the report; and

(ii) a description in writing of the rights of the consumer under this title, as prescribed by the Federal Trade Commission under section 609(c)(3)."

[So if the employer refuses to hire the consumer, or demotes him or her if a current employee, based upon the content of the consumer's credit report, the employer must provide the consumer with a copy of his or her credit report and a description of the rights of the consumer pursuant to the FCRA.]

"(B) Application by mail, telephone, computer, or other similar means.

(i) If a consumer described in subparagraph (C) applies for employment by mail, telephone, computer, or other similar means, and if a person who has procured a consumer report on the consumer for employment purposes takes adverse action on the employment application based in whole or in part on the report, then the person must provide to the consumer to whom the report relates, in lieu of the notices required under subparagraph (A) of this section and under section 615(a), within 3 business days of taking such action, an oral, written or electronic notification--

(I) that adverse action has been taken based in whole or in part on a consumer report received from a consumer reporting agency;

(II) of the name, address and telephone number of the consumer reporting agency that furnished the consumer report (including a toll-free telephone number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis);

(III) that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide to the consumer the specific reasons why the adverse action was taken; and

(IV) that the consumer may, upon providing proper identification, request a free copy of a report and may dispute with the consumer reporting agency the accuracy or completeness of any information in a report.

(ii) If, under clause (B)(i)(IV), the consumer requests a copy of a consumer report from the person who procured the report, then, within 3 business days of receiving the consumer's request, together with proper identification, the person must send or provide to the consumer a copy of a report and a copy of the consumer's rights as prescribed by the Federal Trade Commission under section 609(c)(3)."

[If the potential employee (or current employee if seeking a raise or promotion) does not apply in person and suffers an adverse action (i.e. does not get the job or is denied the promotion or raise), then the employer must give written notice to the consumer of the adverse action and must provide the identity and address of the consumer reporting agency that provided the credit report that the adverse action is based upon, tell the employee that the consumer reporting agency did not make the decision to deny the employment application (even though the consumer reporting agencies do provide the "denial codes" used by most users when denying credit or employment) and inform the consumer that he can obtain a free copy of the consumer report from the consumer reporting agency (but not from the prospective employer, which would make more sense since that is the actual consumer report used in the adverse action decision, unlike the credit report the credit bureau sends days or even weeks later that may have changed since the date of the adverse action) and that he can dispute to the credit bureau any inaccuracies on the credit report.]

"(C) Scope. Subparagraph (B) shall apply to a person procuring a consumer report on a consumer in connection with the consumer's application for employment only if--

(i) the consumer is applying for a position over which the Secretary of Transportation has the power to establish qualifications and maximum hours of service pursuant to the provisions of section 31502 of title 49, or a position subject to safety regulation by a State transportation agency; and

(ii) as of the time at which the person procures the report or causes the report to be procured the only interaction between the consumer and the person in connection with that employment application has been by mail, telephone, computer, or other similar means."

[Subsection (C) limits subsection (B) to only jobs that the Secretary of Transportation has authority over to establish qualifications and maximum hours or jobs subject to safety regulations from a State transportation agency and only such jobs that are not applied for in person.]

"(4) Exception for national security investigations.

(A) In general. In the case of an agency or department of the United States Government which seeks to obtain and use a consumer report for employment purposes, paragraph (3) shall not apply to any adverse action by such agency or department which is based in part on such consumer report, if the head of such agency or department makes a written finding that–

(i) the consumer report is relevant to a national security investigation of such agency or department;

(ii) the investigation is within the jurisdiction of such agency or department;

(iii) there is reason to believe that compliance with paragraph (3) will–

(I) endanger the life or physical safety of any person;

(II) result in flight from prosecution;

(III) result in the destruction of, or tampering with, evidence relevant to the investigation;

(IV) result in the intimidation of a potential witness relevant to the investigation;

(V) result in the compromise of classified information; or

(VI) otherwise seriously jeopardize or unduly delay the investigation or another official proceeding."

[In other words, if an agency or department of the United States government obtains and uses a consumer report when denying an employment application, the agency or department does not have to comply with the requirements of subsection (3) if the consumer report is relevant to a national security investigation, the investigation is within the purview of that particular agency or department, and there is "reason to believe" that the investigation would either put someone at risk, result in someone either fleeing prosecution or tampering with evidence (i.e. because they were prematurely put on notice of the investigation), result in a witness potentially being intimidated or classified information being compromised or (the catchall) otherwise risking or delaying the investigation or other official proceeding. These reasons are so broad and vague just about any fact pattern could be shoehorned into one of them.]

"(B) Notification of consumer upon conclusion of investigation. Upon the conclusion of a national security investigation described in subparagraph (A), or upon the determination that the exception under subparagraph (A) is no longer required for the reasons set forth in such subparagraph, the official exercising the authority in such subparagraph shall provide to the consumer who is the subject of the consumer report with regard to which such finding was made--

(i) a copy of such consumer report with any classified information redacted as necessary;

(ii) notice of any adverse action which is based, in part, on the consumer report; and

(iii) the identification with reasonable specificity of the nature of the investigation for which the consumer report was sought."

[Once either the investigation is over or the reason for keeping secret the fact that a credit report was obtained is no longer valid, the government agency or department must provide the consumer a copy of the credit report and provide notice of any adverse action and describe generally the nature of the investigation.]

"(C) Delegation by head of agency or department. For purposes of subparagraphs (A) and (B), the head of any agency or department of the United States Government may delegate his or her authorities under this paragraph to an official of such agency or department who has personnel security responsibilities and is a member of the Senior Executive Service or equivalent civilian or military rank."

[In other words, the head honcho of the agency or department can delegate his authority to a subordinate in his department of sufficient security clearance.]

"(D) Report to the Congress. Not later than January 31 of each year, the head of each agency and department of the United States Government that exercised authority under this paragraph during the preceding year shall submit a report to the Congress on the number of times the department or agency exercised such authority during the year.

(E) Definitions. For purposes of this paragraph, the following definitions shall apply:

(i) The term 'classified information' means information that is protected from unauthorized disclosure under Executive Order No. 12958 or successor orders."

[See http://www.fas.org/sgp/clinton/eo12958.html.]

"(ii) The term 'national security investigation' means any official inquiry by an agency or department of the United States Government to determine the eligibility of a consumer to receive access or continued access to classified information or to determine whether classified information has been lost or compromised."

[i.e. investigations to initiate or renew security clearances.]

I'll pick back up with subsection (c) in part 3 regarding 15 U.S.C. 1681b.