screening and fair credit reporting laws

Please note - laws may differ depending upon your location.

Federal Fair Credit Reporting Act

Click here to view Federal Fair Credit Reporting Act information that most applies to you as an end-user of consumer reports.

Rental Screening Notices

Washington Law prohibits charging an applicant for a screening report unless proper notice is provided to the applicant prior to the procurement of a rental screening report. Please review RCW Chapter 59.18.257 - specifically subsection (2) with regard to this information.

Employment Screening Notices

Washington Governor Christine Gregoire signed into law a bill prohibiting employers from accessing a consumer report on an employee's or applicant's credit worthiness, credit standing, or credit capacity for employment purposes unless such information is substantially related to the individual's current or potential job or required by law. An employer also must provide to the employee or applicant in writing the reasons for using the consumer credit report. This "advance" notice provision would not apply to an employer investigation involving an employee "who the employer has reasonable cause to believe has engaged in specific activity that constitutes a violation of law." This change to Washington's fair credit reporting law went into effect July 22, 2007. See RCW Chapter 19.182.020, specifically subsection (C).

Under federal and state fair employment laws, employers should already be considering the job-relatedness of credit information in making employment decisions. Rejecting applicants based upon poor credit history may disproportionately exclude certain minority groups from consideration. The EEOC contends an organization should not use such information if it causes an "adverse impact," unless justified by job-relatedness and business necessity. There is good news for Washington employers, too. This new law will reduce the risk of successful disparate impact claims based upon denial of employment because of poor credit history, since employers either will abandon pre-employment credit checks entirely or meet the higher substantially related standard.

With greater scrutiny being placed on background checks generally, employers in Washington and elsewhere should review whether the information sought about applicants and employees is consistent with applicable laws. For example, some states already restrict conviction inquiries. Therefore, a misstep in the background check process can lead to potential liability under a variety of laws.