The Fair Credit Reporting Act (FCRA) is the US federal law covering background checks run through a screening company, which the law calls consumer reports. Employers need a clear written disclosure and the person's written permission first, and must give notice before and after rejecting someone because of the report.
Law and compliancetopic
2 minread
1related terms
In one line
The US law covering background checks run through a screening company. You need written disclosure and consent first, and notice before rejecting someone because of the report.
Before ordering a report, the employer must give a standalone written disclosure that a report may be used for employment decisions and get written authorization. The disclosure cannot be buried in the job application. The employer also certifies to the screening company that it has complied and will not misuse the information.
If the employer may take adverse action, such as withdrawing an offer, based on the report, it must first send a pre adverse action notice with a copy of the report and the summary of rights. This gives the person a chance to dispute errors. After the decision, an adverse action notice must name the screening company and explain the person's right to dispute and get a free copy.
Many states and cities add their own rules, such as fair chance laws on criminal history. This is general information, not legal advice.
Why it matters to recruiters
Recruiters often run or coordinate background checks and deliver the news when a check causes problems. Skipping a step, such as using a disclosure stuffed with extra terms or rejecting before notice, can expose employers and agencies to claims. Knowing the sequence keeps offers clean and fair.
An example from a recruiting desk
Here is how one staffing agency handles an offer for a finance role. The candidate signs a standalone disclosure and authorization, and the screening company finds a conviction record that does not match her history. The agency sends a pre adverse action notice with the report and summary of rights. She disputes it, the screening company confirms the record belonged to someone else, and she starts on schedule.
Tips that help
Use a standalone disclosure form, separate from the application.
Send the pre adverse action notice with the report and summary of rights before deciding.
Give candidates a fair chance to dispute errors before a final decision.
Check state and city fair chance rules where you hire.
Mistakes to avoid
Adding release of liability or other extra terms to the FCRA disclosure.
Withdrawing an offer the moment a report flags something, with no notice.
Frequently asked questions
Does the FCRA apply to every background check?
It applies when an employer uses a consumer reporting agency, such as a background screening company. Checks an employer does entirely in house may fall outside the FCRA but can still be covered by other laws.
How long must an employer wait after a pre adverse action notice?
The FTC's employer guidance does not set a specific number of days. It expects a real chance to review and dispute. Many employers wait several business days, and some state laws set timelines.
Do staffing agencies have FCRA duties?
Yes, when they order consumer reports for employment purposes. Agencies and clients should agree who handles disclosure, authorization and adverse action notices.
