• Congress Passes Bill Excluding Third-Party Investigations Of Employee Wrongdoing from Fair Credit Reporting Act
  • December 6, 2003
  • Law Firm: Ford & Harrison LLP - Atlanta Office
  • Congress has approved legislation reauthorizing the Fair Credit Reporting Act (FCRA), which includes a provision to exempt third-party investigations of employee wrongdoing from the reporting and disclosure provisions of the FCRA. The provision amends the Act's definition of "consumer report" to exclude communications made by a third party to an employer in connection with the investigation of suspected misconduct relating to employment or compliance with federal, state, or local laws and regulations, the rules of a self-regulatory organization, or any pre-existing written policies of the employer.

    To be excluded, the communication must not be made for the purpose of investigating a consumer's credit worthiness, credit standing, or credit capacity. Additionally, to be excluded, the communication can only be made to certain entities including the employer, federal, state or local officers or agencies, or a self-regulatory organization with authority over the employer or employee. After taking an adverse action based on such a communication, the employer must disclose to the consumer a summary containing the nature and substance of the communication; the employer is not required to disclose the sources of the communication.

    The provision was included to counteract a Federal Trade Commission interpretation of the FCRA that impedes the use of third-party investigations of harassment and other workplace misconduct (known as the "Vail Letter."). The President has expressed strong support for the legislation and is expected to sign it into law soon.