Dec 10, 2003 General Employment Issues

Fair Credit Reporting Act Amendments Signed by President Bush

On December 4, 2003, President Bush signed into law the Fair and Accurate Credit Transactions Act of 2003 (“FACT”) (See Congress Amends Fair Credit Reporting Act to Exclude Investigations of Employee Wrongdoing and to Further Restrict Receipt of Medical Information (Dec 1, 2003 )), which amends the Fair Credit Reporting Act (“FCRA”) to exclude investigations of employee wrongdoing from FCRA’s notice and authorization requirements. Under the FACT, an employer is no longer required to notify an employee and obtain the employee’s written authorization before the employer can use an outside agency to investigate employee wrongdoing. If, however, an employer subsequently takes an adverse employment action against the employee, such as termination or demotion, as a result of information received from the outside agency’s investigation, FACT requires the employer to provide the employee with a summary of the report, although the employer does not have to disclose the sources of the information for the report. The effective date of the provisions regarding investigations of employee wrongdoing will be determined by the FTC and the Board of Governors of the Federal Reserve System.

The FACT also further restricts an employer’s ability to receive medical information. Under the FACT an outside agency conducting an investigation of an employee or an applicant may not provide any medical information to an employer unless the information is both relevant to the employment and the employee or applicant has signed a written consent form “that describes in clear and conspicuous language the use for which the information will be furnished.” The medical information provisions will go into effect 180 days after the date the law was signed by President Bush.