State Laws Make Federal Fair Credit Reporting Act Compliance Difficult for Employers

Posted June 1, 2011 — By Tom Ahearn, ESR News Editor

A recent article from the HR Daily Advisor – ‘Which State Laws Make FCRA Just That Much Harder?’ – featured Attorney Lester Rosen, CEO of accredited background screening company Employment Screening Resources (ESR), who advised employers to follow state rules for the federal Fair Credit Reporting Act (FCRA) as part of the steps for FCRA compliance he offered at the Society for Human Resource Management (SHRM) Employment Law and Legislative Conference, held recently in Washington, DC.

Rosen notes that many U.S. states have their own laws, some quite detailed, with FCRA implications that regulate the collection, dissemination, and use of information for employment screening background checks. In Massachusetts, for example, Rosen says the final adverse action letter must be in 10-point type minimum, be issued within 10 days, and use specified language.  California has what he calls numerous “only in California rules.”

The 20 U.S. states with their own FCRA-type rules are:

  • Arizona
  • California
  • Colorado
  • Georgia
  • Kansas
  • Kentucky
  • Minnesota
  • Montana
  • New Hampshire
  • New Jersey
  • New Mexico
  • New York
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Oklahoma
  • Rhode Island
  • Texas
  • Washington

In addition, Rosen says various states have special rules concerning the following: Disclosure forms for consumer, Rules for Investigative Consumer Reports, Nature and Scope letter, Disputed Accuracy procedures, Timing and notice of reports, Notification periods, and 7-year limits on criminal records.

According to Rosen, the following states limit employers from using arrests: California, Hawaii, Illinois, Massachusetts, Michigan, Nevada, New York, Pennsylvania, Rhode Island, Utah, Virginia, Washington, and Wisconsin.

Rosen says California, Hawaii, and Massachusetts limit employers from using misdemeanors, while California, Georgia, Hawaii, Illinois, and Massachusetts limit first offense records, records based upon a certain age (other than a seven year limit), or diversion/nonadjudication programs.

Also, the following states limit expunged or sealed records: California, Colorado, Hawaii, Illinois, Ohio, Oklahoma, Oregon, Rhode Island, Texas, Virginia, Louisiana, Maryland, New Jersey, South Dakota, Utah, and Virginia.

Lastly, Rosen says that many states have rules reflecting Equal Employment Opportunity Commission (EEOC) guidelines for the use of criminal records with arrests or convictions. If employers decide not to hire workers or terminate employees as a result of criminal records, the employers must show that they considered the following three factors to determine whether their decisions were justified by business necessity:

  • The nature and gravity of the offense or offenses;
  • The time that has passed since the conviction and/or completion of the sentence; and
  • The nature of the job held or sought.