Can the FCRA Apply to the Sharing Economy?

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Can the Fair Credit Reporting Act (FCRA) apply to the Sharing Economy? And are all of the FCRA’s requirements really pertinent to our business?

These are some of the most common questions HireRight receives from companies participating in the Sharing Economy who offer digital marketplaces.

While there is not a definitive answer to these questions, we can provide context and background perspective that may give you some food for thought.

  1. The Federal Trade Commission (FTC) has opined that under FCRA, an employment relationship may be defined broadly enough to explicitly include contractor services. While this was an advisory opinion it does indicate the breadth with which the FTC has been willing to interpret the FCRA.
  2.  Separately, the Equal Employment Opportunity Commission (EEOC) has stated that criminal background checks should be individually assessed for employment relationships. The EEOC argument implies that unless individual assessments are performed for each person whose background contains adverse information, the employer may be acting in a potentially discriminatory way when evaluating its candidates. 

Sharing Economy companies therefore should consider the aggregate effect of both of these two opinions.

Whether the government will consider a digital marketplace to be an employer, as described under FRCA (and whether that marketplace will have to comply with required disclosure documents, adverse action letters, etc.) has not been clearly defined by the FTC or EEOC.

At present, there is an absence of substantive legal foundation and precedence for Sharing Economy companies with respect to this matter. 

So, what does this this mean for Sharing Economy companies? It may yet be an extended timeframe before this matter is settled with firm legal precedence.

Until then, companies should be aware of the two independent opinions of the FTC and EEOC and how they may affect their legal obligations. Ultimately, your company’s aversion to risk may be a deciding factor to compliance.

If you are a service provider in the Sharing Economy, you should engage your legal counsel and background check company for a discussion on the subject.

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HireRight is a leading provider of on-demand employment background checks, drug and health screening, and electronic Form I-9 and E-Verify solutions that help employers automate, manage and control background screening and related programs.

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