FCRA
Took Effect
March 31, 2004
The section of
the Fair and Accurate Transactions Act of 2003 which exempts employers
from some disclosure requirements of the FCRA for conducting
misconduct investigations took effect on March 31, 2004. Other
sections of the Act will have different effective dates.
Investigators
who donated funds, wrote letters, and lobbied are to be congratulated
for their perseverance during the five-plus years it took to get
Congress to remedy a serious error.
Representative
Pete Sessions, R-TX, also persevered, introducing bills in three
consecutive sessions of Congress before getting his last version
included in the omnibus reauthorization bill.
Between now and
March 31, 2004, the old FCRA rules apply. Until that time, employers
must still notify consumers if they wish to order a misconduct
investigation and provide the report.
And even after
March 31, 2003, pre-employment investigations are still covered by the
FCRA. It is highly recommended that you and/or your client seek
counsel from a qualified attorney before initiating investigations
based on the new law change.
Here is what the
pertinent section of HR 2622 says:
TITLE
VI--PROTECTING EMPLOYEE MISCONDUCT INVESTIGATIONS
SEC. 611. CERTAIN EMPLOYEE INVESTIGATION
COMMUNICATIONS EXCLUDED FROM DEFINITION OF CONSUMER REPORT.
(a) IN GENERAL- Section
603 of the Fair Credit Reporting Act (15 U.S.C. 1681a), as amended by
this Act is amended by adding at the end the following:
`(x) EXCLUSION OF CERTAIN COMMUNICATIONS FOR EMPLOYEE INVESTIGATIONS-
`(1) COMMUNICATIONS DESCRIBED IN THIS SUBSECTION-
A communication is described in this subsection if--
'(A) but for subsection (d)(2)(D), the communication would be a
consumer
report;
`(B) the communication is made to an employer connection with an
investigation of--
`(i) suspected misconduct relating to employment; or
`(ii) compliance with Federal, State, or local laws and regulations,
the rules of a self-regulatory organization, or any preexisting written policies
of
the employer;
`(C) the communication is not made for the purpose of investigating a
consumer's credit worthiness, credit standing, or credit capacity; and
`(D) the communication is not provided to any person except--
`(i) to the employer or an agent of the employer;
`(ii) to any Federal or State officer, agency, or department, or any
officer,
agency, or department of a unit of general local government;
`(iii) to any self-regulatory organization with regulatory authority
over the activities of the employer or employee;
`(iv) as otherwise required by law; or
`(v) pursuant to section 608.
`(2) SUBSEQUENT DISCLOSURE- After taking any adverse action based in
whole
or in part on a communication described in paragraph (1), the employer
shall
disclose to the consumer a summary containing the nature and substance
of the
communication upon which the adverse action is based, except that the
sources
of information acquired solely for use in preparing what would be but
for subsection(d)(2)(D) an investigative consumer report need not be disclosed.
`(3)
SELF-REGULATORY ORGANIZATION DEFINED- For purposes of this
subsection, the term `self-regulatory organization' includes any
self-regulatory
organization (as defined in section 3(a)(26) of the Securities
Exchange Act of
1934), any entity established under title I of the Sarbanes-Oxley Act
of 2002,
any board of trade designated by the Commodity Futures Trading
Commission, and any futures association registered with such Commission.'.
(b) TECHNICAL AND CONFORMING AMENDMENT- Section 603(d)(2)(D) of the
Fair Credit Reporting Act (15 U.S.C.
1681a(d)(2)(D)) is amended by inserting `or
(x)' after `subsection (o)'.
