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The FCRA and Motor Carriers: What do you Need to Know? Pt. 2

HireRight Associate Counsel Nicole Campion continues to help motor carriers learn what they need to know about the FCRA in part two of her blog.

October 18, 2022
Nicole Campion, Associate Counsel at HireRight
2022-10 -Blog- The-Fair-Credit-Reporting-Act-and-Motor-Carriers-What-do-you-Need-to-Know

In this two-part blog, we are taking a closer look at some of the pre-and post-report requirements the Fair Credit Reporting Act places on employers and how the regulated trucking exception impacts those requirements. In part one we provided a brief introduction to the Fair Credit Reporting Act, the “regulated trucking exception,” and “employment purposes,” and covered some of the FCRA’s pre-report requirements.

As a quick recap of part one, the Federal Fair Credit Reporting Act (the “FCRA”) regulates the provision and use of consumer reports (commonly referred to as “background reports”) containing a variety of information, including criminal and driving records, for a variety of purposes – including employment purposes. While employment purposes does cover the evaluation of a person for employment, promotion, reassignment, or retention, the Federal Trade Commission (FTC) stated in their 40 Years of Experience with the FCRA report that “employment purposes” is broadly construed and may also apply to screening non-employee workers such as owner-operators (see page 32).

Generally speaking, employers – including motor carriers – must comply with the FCRA when they order virtually any type of background report from a consumer reporting agency such as HireRight, including reports containing motor vehicle records checks or criminal checks.

The FCRA provides a limited exception to some of its requirements for employers ordering and using consumer reports for employment decisions. This exception, found in Sections 604(b)(2)(B) and 604(b)(3)(B) of the FCRA, applies only when:

  1. An applicant is applying for employment in “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

  2. The only interaction the employer has had with the applicant in connection with their application has been by mail, telephone, computer, or other similar means.

It is important to remember that this exception applies only when a position meets the specific limited conditions that sections 604(b)(2)(B) and 604(b)(3)(B) of the FCRA establish. Other positions within a motor carriers’ organization – such as office staff or other non-drivers – do not qualify for this exception. Additionally, the exception does not apply if, for example, there are any in-person interactions between the employer and the driver.  For those positions that do not qualify for the regulated trucking exception, motor carriers must comply with all of the standard FCRA requirements that apply to employers.

Fair Credit Reporting Act (FCRA) Obligations Post-Report

General Requirement

Whenever information in a consumer report is used to take adverse action against an applicant or employee, the employer has certain obligations under the FCRA. Generally speaking, adverse action is any action that is unfavorable to the interest of the subject of the report. This includes any negative decision about the individual’s employment status, such as firing or not hiring them, not placing them in a particular position, or not promoting them.

When taking adverse action against an applicant, there are a few required steps employers must take. First, when the employer is considering taking adverse action based in whole or in part on the applicant’s background report, before any action is taken the employer must provide the applicant with a “pre-adverse action” notice that includes a copy of the entire background report and a copy of the Consumer Financial Protection Bureau (CFPB)’s Summary of Rights Under the FCRA.

Once a pre-adverse action notice has been provided, employers must wait a “reasonable period of time” before taking any adverse action. This is intended to allow the applicant adequate time to receive and review their background report and dispute any information in the report they believe to be inaccurate. Although a “reasonable period of time” is not defined by the FCRA, best practice is to allow a minimum of five business days, as the FTC has opined that this is a reasonable period. With that said, several state and local jurisdictions have passed laws that may extend this timeframe to seven or even ten business days.

After a reasonable period of time (or the timeframe required by applicable law) has elapsed, should the employer still wish to take adverse action against the applicant they must provide the applicant a second notice, referred to as an “adverse action notice.” The notice of the adverse action must be provided orally, in writing or electronically and must include:

  • Contact information for the consumer reporting agency that prepared the report (name, address, and telephone number, including a toll-free telephone number if the agency compiles and maintains files on consumers on a nationwide basis);

  • A statement that the consumer reporting agency did not make the adverse decision and is unable to provide the specific reasons for it;

  • Notice that the consumer has the right to obtain a free copy of the report from the consumer reporting agency within 60 days; and

  • Notice that the consumer can dispute the accuracy or completeness of the report.

FCRA Exception for Regulated Trucking Positions

If the regulated trucking exception applies, the employer is not required to complete the two-step pre-adverse action / adverse action notice process. Instead, within 3 business days of taking adverse action the employer must provide the applicant a single oral, written, or electronic notice that adverse action has been taken based in whole or in part on a consumer report received from a consumer reporting agency. The notice must include:

  • Contact information for the consumer reporting agency that prepared the report (name, address, and telephone number, including a toll-free telephone number if the agency compiles and maintains files on consumers on a nationwide basis);

  • A statement that the consumer reporting agency did not make the adverse decision and is unable to provide the specific reasons for it; and

  • Notice 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.

See the table below for a side-by-side comparison of the pre and post-adverse action requirements for regulated trucking positions versus all other positions.

 

Regulated Trucking Positions (604(b)(3)(B))

All Other Positions (604(b)(3)(A))

Pre-Adverse Action

No specific actions required under the FCRA

A copy of the report The CFPB’s “A Summary of Your Rights Under the Fair Credit Reporting Act” FCRA document

Post-Adverse Action

Timing:

 

Within 3 business days of taking adverse action  

 

Method:

 

Oral, written or electronic notification that adverse action has been taken based in whole or in part on a consumer report received from a consumer reporting agency  

 

Content:

 

The required contact information for the consumer reporting agency. A statement 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, Notice 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.

Timing:

 

A reasonable period of time after the pre-adverse action (unless a specific timeframe is required by applicable law)  

 

Method:

 

Oral, written, or electronic notice of the adverse action  

 

Content:

 

  The required contact information for the consumer reporting agency. A statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken. Notice that the consumer has the right to obtain a free copy of the report from the consumer reporting agency within 60 days. Notice that the consumer can dispute the accuracy or completeness of the report  

State and Local Laws

In addition to the Federal Fair Credit Reporting Act, there are many state and local laws that impose additional restrictions and obligations on employers when ordering and using background checks in employment decisions. Check out HireRight’s Ban the Box and Fair Chance Hiring Laws and Consumer Reporting Laws, Credit Checks and Discrimination White Papers for more information.

How can HireRight Help?

HireRight makes a number of reference documents covering a variety of topics available to customers in our Resource Library.

HireRight also offers an array of services designed to help facilitate compliance with the Fair Credit Reporting Act and similar state and local laws. Contact your Account Manager or Customer Service Representative today for more information.

Release Date: October 18, 2022

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Nicole Campion

Nicole Campion is Associate Counsel at HireRight, with a focus on U.S. compliance for the HireRight organization. Nicole earned her Juris Doctorate from Albany Law School and is licensed to practice law in the state of South Carolina. She currently holds an FCRA Advanced Certification through the Professional Background Screening Association (PBSA) and GRC Professional Certification from OCEG. Nicole is an active member of the Professional Background Screening Association’s Industry Practices committee, frequently contributing to practical guidance documents for member organizations, and was a presenter at the PBSA’s 2021 mid-year conference.