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Workplace Investigations and the Fair Credit Reporting Act (FCRA)


I saw an article from Diane Pfadenhauer on workplace investigations, and I liked it because it spoke to the issue that not many employers know about: You must give those you investigate a copy of the report if you are going to discipline them based upon it. Many, many employers don’t understand exactly what’s required, so here’s how Ms. Pfadenhauer explains it: “Workplace Investigations – Tip # 10 The FACT Act – Those involved in investigating employee misconduct had been stymied by the Federal Trade Commission’s (FTC) interpretation of the requirements of the Fair Credit Reporting Act since the dreaded Vail Letter, back in 1999. In that letter, an attorney for the FTC interpreted the law to require employers who used third parties to investigate allegations of harassment and misconduct to comply with the requirements of the Fair Credit Reporting Act (FCRA), deeming them investigative consumer reports under the law. What this meant for employers is that it now required them to seek consent from the accused to conduct an investigation. In addition, it required providing that individual with a full, detailed report of the investigation prior to taking any adverse action.

The FACT Act, which became effective in March 2004, amended certain provisions of the FCRA. Specifically, the law changed those requirements, ensuring that employers can conduct a fair and impartial investigation without compromising confidentiality and the investigatory process. The new requirements apply to investigations of suspected misconduct, violations of laws or regulations, complaints of harassment or discrimination, and violations of pre-existing written policies of the employer. What You Need to Know: * Under the new law, certain investigations are now no longer considered investigative consumer reports. This means that with the use of outside investigators, employers no longer have to obtain prior consent from the accused employee prior to conducting the investigation. * Employers are no longer required to provide a detailed report to the individual containing sensitive employee information and the names of interviewed parties. However, where employers are required provide the accused with a summary of the investigation, they may omit these sensitive details. Employers no longer have to provide this summary prior to taking adverse action.

Thus, if the results of the investigation warrant discipline or termination, the employer may take that action and provide the summary report to the employee thereafter. * In an effort to be sensitive to the need for confidentiality in investigations, any report must only be disclosed to the employer or its agent or legal authorities.”