Frequently Asked Questions


To help you understand some of the factors that affect our ability to serve you in a timely and cost-effective manner, we have prepared a list of Frequently Asked Questions (FAQ). Please let us know if you have any additional questions or concerns.
A. General Matters:
  1. We send CARCO a copy of the employment application and the release from the applicant. What else can we do to help CARCO provide faster time service?
  2. Why are there occasions where we receive several telephone calls for missing or illegible information on the same applicant?
  3. We understand the importance of complete and legible applications. Should we be concerned about anything else that might slow the verification process down?
  4. What other factors can contribute to delays that are beyond our control and/or beyond CARCO's control?
  5. Why would CARCO's database not reflect a background check request that was faxed earlier?
  6. What action must be taken to comply with the FCRA in the event the applicant is being denied employment with our company?
  7. How can I ascertain the current government repository fees that are charged for criminal history record checks and motor vehicle record searches?
  8. Can you provide a list and samples of some of the more frequently used FCRA-related forms used in the employment screening process?
B. Criminal History Record Searches:
  1. Do criminal history record checks exhibit any time service inconsistencies, especially within the same county or state?
  2. Occasionally, CARCO requests the salary of the applicant. Why is that necessary?
  3. Is it still necessary to provide a salary in situations where the applicant has advised us of a criminal conviction that is more than seven years old?
  4. Why is it necessary for CARCO to have the applicant's date of birth for a criminal history record check? Shouldn't the Social Security number suffice?
  5. Why is it necessary for CARCO to have the full name of the applicant?
  6. How is it possible that an applicant admits to a criminal conviction, yet the consumer report indicates no record of such conviction?
  7. What does the term "SPLIT" mean in CARCO's "Investigative Summary" portion of the report?
  8. Under what circumstances would an employer want to search BOTH a county and statewide criminal history record check? Wouldn't the statewide cover all counties?
  9. We perform statewide criminal history record checks in states where they are lawfully available and meet CARCO's quality and time service standards. Why do statewide criminal history record searches, especially Pennsylvania, New Jersey and Florida, average 24-48 hours, but other searches from the same statewide repository take longer (several weeks or more)?
  10. Why is it necessary for CARCO to have the applicant's mother's maiden name for criminal history record checks and motor vehicle record checks that are performed in Puerto Rico?
  11. What is the current availability of publicly accessible statewide repositories of criminal history record information? Are they all offered by CARCO?
  12. In addition to a state-level criminal history record search, are there any other searches that are available to us?
C. Education Verification:
  1. At times the education verification is completed quickly. Yet, at other times, it takes much longer. Why is it so inconsistent?
  2. What would cause a situation to occur whereby CARCO would not be able to verify a degree, yet the applicant has produced a copy of his/her degree to substantiate the education level claimed?
  3. Is there any special reason why a GED earned in New Jersey takes so long to confirm?
D. Credit Reports:
  1. What procedures should be followed to allow the applicant to get a copy of his/her credit report?
  2. What must the applicant do to correct errors in his/her credit report?
  3. The term "bankruptcy discharged" appears in the credit report. What does this mean?
  4. What is meant by the term "HAWK ALERT" in the credit report?
E. Foreign Verifications:
  1. Do foreign leads create any special problems that we should be aware of with respect to time service?
F: Military Record Verification:
  1. We need to verify former military service on one of our applicants. Are there any special forms required to do this in addition to the standard application and FCRA release forms?
G. Legal Aspects of Employment Screening:
  1. Can an employer ask an applicant if he/she was ever convicted of a crime? (See Attached Document)
  2. Do the California employment screening statutes apply only to reports covering current California residents?
  3. What are the disclosure and authorization requirements under the California law with respect to a California employer who procures a background check on a California resident?
  4. How should the issues raised by the FTC Informal Staff Opinion in Vail, involving investigations of alleged workplace misconduct, be resolved in California, since FCRA law and California law now seem to conflict with respect to notice and disclosure obligations?
  5. Can CARCO provide us with a summary of the changes recently made to the federal Fair Credit Reporting Act (FCRA) concerning the Fair and Accurate Credit Transactions Act of 2003, signed by President Bush on December 4, 2003 (FACTA)? There are myriad revisions to the FCRA and it would be helpful to have a brief summary of each title in FACTA.
  6. How can I obtain a copy of the federal Fair Credit Reporting Act (FCRA)?
  7. Do I have to follow the standard FCRA employee notice and authorization requirements if I hire third-party organizations, including law firms, to investigate allegations of workplace misconduct? Also, are there any differences between federal and state law in this type of investigation?


A. General Matters

  1. We send CARCO a copy of the employment application and the release from the applicant. What else can we do to help CARCO provide faster time service?
It is critical that you send us legible source documents. Faxed documents can be a problem if the applicant's handwriting is too small, crowded or otherwise not printed neatly, causing letters or numbers to be blurred. Frequent callbacks are necessary to clarify the information written, causing delays in the start of the verification process. It is also important to ensure that the applicant provides complete information. Before sending the application to us, check that all addresses and contact information are complete (name of school/employer, street, city, state, zip code and telephone numbers).

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  1. Why are there occasions where we receive several telephone calls for missing or illegible information on the same applicant?
We recognize that your time is valuable. We make every effort to complete the review of the employment application prior to initiating a call for missing or illegible information. However, there may be occasions where a follow-up call is necessary to clarify a discrepancy uncovered during the verification process with the source (e.g., a slight name or date of birth variation). We try to keep these calls to a minimum. We welcome any feedback you may have if you feel the level of service you are receiving needs improvement.

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  1. We understand the importance of complete and legible applications. Should we be concerned about anything else that might slow the verification process down?
Consistency is also important to the speed of the overall verification process. This is especially critical in the applicant's name. Many individuals go through stages in their life under different names as a result of marriage, divorce, adoption, etc. Nicknames and variations in the use of first, middle and last names are also commonplace. Ensure that the applicant is consistent in filling out his/her name on the application and release form. The applicant's use of a different name or variations in the name should be noted on the application in addition to the date(s) such name was used, if possible. This will also be extremely helpful in providing a comprehensive and cost-effective criminal history record search, where required.

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  1. What other factors can contribute to delays that are beyond our control and/or beyond CARCO's control?
We attempt to verify information by telephone as quickly as possible. However, some of the sources we contact will not provide any information absent a signed release/authorization from the applicant. This information is either faxed (preferable method) or sent via overnight courier at an additional cost (if required by the source). In some cases, for expedient delivery where the source's response will not be provided via fax, CARCO will also send an overnight courier return envelope. On many occasions, these requests require one or more follow-up calls before the information is finally provided. Vacations, holidays and other absences at the source can further exacerbate the situation. CARCO maintains a special unit that solely handles pending letter and fax requests to ensure that this aspect of our investigative process is handled as expeditiously as possible.

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  1. Why would CARCO's database not reflect a background check request that was faxed earlier?
Normally, faxed requests go directly into our computer system. However, technology is not infallible. Sporadic episodes of cases not going into the database may be experienced due to telephone line problems, storm activity, etc. However, if the problem persists, please let us know and we will arrange to provide an "echo" listing, via fax, of all cases received so that you may be assured of our having properly received the request while the problem is being investigated by our technical staff.

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  1. What action must be taken to comply with the FCRA in the event the applicant is being denied employment with our company?
Pursuant to the requirements of the FCRA, prior to an employer taking adverse action with respect to a consumer's employment status (i.e., hire, promotion, reassignment, or retention) that is based in whole or in part on the information provided in a consumer report, the employer must first provide the consumer with a "pre-adverse action" letter that includes a copy of the consumer report and a summary of the consumer's rights under the law. The law is silent on the time period that must elapse before actually taking the adverse action (e.g., deciding not to hire the applicant). However, the general practice is to allow approximately 3 to 5 days from "pre-adverse" notice to "adverse" action. This time period allows the consumer time to dispute any erroneous information that may be contained in the consumer report. Upon taking the adverse action, the employer is required to provide the consumer with an "adverse action" letter notifying him or her of the action taken.

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  1. How can I ascertain the current government repository fees that are charged for criminal history record checks and motor vehicle record searches?
As you are aware, in addition to the investigative fee that CARCO charges to perform a criminal history record check and a motor vehicle record (MVR) search, CARCO passes along any applicable government fees charged by these repositories.

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  1. Can you provide a list and samples of some of the more frequently used FCRA-related forms used in the employment screening process?
The most common FCRA-related forms used in the employment screening process are as follows (click on the blue hyperlink to access a PDF sample of the form):

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B. Criminal History Record Searches

  1. Do criminal history record checks exhibit any time service inconsistencies, especially within the same county or state?
Criminal history record checks generally can be completed within 24 to 72 business hours. However, time service will vary, even within the same state and/or county. Some of the variables that can adversely impact time service include:

  • Applicant's Name - Criminal records are usually voluminous where common names are involved. Often such records contain incomplete identifying information (e.g., date of birth, SSN, etc.) that requires more in-depth research by the law enforcement repository, court and/or CARCO. Possible name matches also require further research before dissemination.
  • Incomplete Records - Records that have incomplete dispositions require further investigation by the repository of record and/or CARCO prior to dissemination.
  • Nature of a Record - A record may indicate a disposition or pending status that, ultimately, may not be reportable to an employer. Due to the seriousness of the subject matter, CARCO will investigate the matter to its final disposition to ensure that the public record is current as of the date the report is provided to the employer. During this period, we will not alert an employer to a possible criminal record if there is any possibility that the record is not reportable.
  • Personnel - Staffing at a law enforcement repository or court may be low due to seasonal periods (holidays, vacations, etc.) and/or the workload may be high due to higher priority law enforcement or other state mandated criminal record check activities.

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  1. Occasionally, CARCO requests the salary of the applicant. Why is that necessary?
In most cases, salary is not an issue with respect to conducting the background check. However, in certain circumstances, salary information may be requested to assist us in determining whether certain adverse information may be lawfully reported to the employer. The federal Fair Credit Reporting Act (FCRA) usually prevails in the reporting of adverse information. Generally, adverse information cannot be reported if it is more than (7) years old unless the consumer earns, or is reasonably expected to earn, $75,000 or more annually. Under federal law, criminal convictions may be reported without restriction. However, certain states have enacted FCRA laws that are stricter than federal law. Some states restrict the reporting of adverse information, including criminal convictions, beyond 7 years and/or where certain salary thresholds are not met (usually lower than the federal $75,000 threshold).

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  1. Is it still necessary to provide a salary in situations where the applicant has advised us of a criminal conviction that is more than seven years old?
Yes. As a consumer reporting agency, we must continue to adhere to federal and state adverse information reporting restrictions. As indicated in the preceding response, some state FCRA laws may prohibit the reporting of a criminal conviction, regardless of the manner in which the adverse information was discovered, when such information antedates the report by 7 years.

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  1. Why is it necessary for CARCO to have the applicant's date of birth for a criminal history record check? Shouldn't the Social Security number suffice?
Law enforcement repositories and courts generally maintain criminal history records under the subject's name and date of birth. Absent these two identifiers, the repository will not search its records. Social Security numbers (SSN) are infrequently used as a primary identifier. However, if available as a primary identifier, CARCO will pursue the search using the SSN.

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  1. Why is it necessary for CARCO to have the full name of the applicant?
Court documents generally reflect the subject's legal name. For example, although an individual has used the name J. Michael Doe all his life, the court document most likely will reflect the criminal record under the subject's legal name, John M. Doe.

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  1. How is it possible that an applicant admits to a criminal conviction, yet the consumer report indicates no record of such conviction?
There are several possible reasons why this may occur. As indicated in the preceding responses, state law may prevent a consumer reporting agency from reporting adverse information, including a criminal conviction, if such information antedates the report by more than 7 years. Another possible reason might be that the county where the conviction occurred did not fall within the client's search specifications. Other possible reasons may include, but not necessarily be limited to: (1) the conviction was a federal crime, not a state-level crime (note CARCO searches state-level crimes - federal-level criminal record searches must be specifically requested by the client); and (2) the record may have subsequently been sealed or expunged.

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  1. What does the term "SPLIT" mean in CARCO's "Investigative Summary" portion of the report?
CARCO follows a standard policy of searching multi repositories in counties where the felony and misdemeanor level criminal offenses are maintained in separate repositories. More than half of the counties in the United States maintain felony and misdemeanor records in separate repositories. In situations where one level of the criminal record is completed before the other (usually the felony record search) - and the other is still pending - the term "SPLIT" appears.

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  1. Under what circumstances would an employer want to search BOTH a county and statewide criminal history record check? Wouldn't the statewide cover all counties?
The statewide criminal history record repository will generally maintain criminal offense records for the entire state. However, each state system is dependent upon the individual county courts for receiving the criminal history record information. Depending on the state and/or the counties involved, the county courts may not be consistent in providing current information to the state repository. In some cases, the county court response time may also be faster. Therefore, it may be advantageous for an employer to search BOTH the county court (faster time service and more current information) and the state repository (more comprehensive search).

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  1. We perform statewide criminal history record checks in states where they are lawfully available and meet CARCO's quality and time service standards. Why do statewide criminal history record searches, especially Pennsylvania, New Jersey and Florida, average 24-48 hours, but other searches from the same statewide repository take longer (several weeks or more)?
CARCO has a long standing policy of seeking out publicly accessible statewide repositories of criminal history record information that are of high quality and present a turnaround time that is acceptable, typically within 24-72 hours on average. In each instance where we feel that quality and/or turnaround time is poor with the statewide repository, we advise our clients to pursue the county repository as the better option, i.e., the courthouse in the jurisdiction of the report subject's present or former residence and/or employment and/or education.

It is important to understand that while certain statewide repositories exhibit excellent turnaround and quality, there are occasions where time service will be adversely impacted. This is especially true for Pennsylvania, New Jersey and Florida, as well as others, on an exception basis. The beauty of the aforementioned state repositories is that 90% or more of the criminal history record searches will be returned in less than 72 hours. In those approximately 10% of cases that go beyond the 72-hour time frame, there are myriad reasons for the delay. However, the predominant reason has to do with incomplete records maintained at the state repository. This may include, but is not necessarily limited to, missing dispositions, and incomplete personal identifying information. In such situations, the repository will not release information to CARCO until such time as the record is updated via the agency's investigation with the court of record. It is this aspect of the search that results in the lengthy delays that we may experience. Understand that it is not the fault of CARCO or the statewide agency, but rather the time delays experienced with the courts. We have NO CONTROL over this situation.

It is our standard policy to ensure that every criminal history record search result is complete and accurate as of the date the subject report is reported to our client. We will not release partial criminal history record information that is incomplete or does not relate to the report subject, which only serves to make the hiring decision more onerous. In circumstances involving delays at various statewide agencies, we will advise you similar to the following:

The criminal history check you requested on John Doe in [jurisdiction] is still ongoing. CARCO is awaiting a response from this repository. We have been informed by the court or agency that it may take [days / weeks] to respond fully to our inquiry.

This delay is a function of court or agency workload and/or procedures. The delay in no way reflects on the report subject and should not be interpreted to mean the report subject does or does not have a criminal record of any kind in this jurisdiction.

CARCO will promptly notify you of the results of our investigation and provide you with any reportable information once we have received a response to our inquiry.

It is most important to note that one cannot and should not infer that there is or is not any criminal history record associated with the report subject.

As a means to facilitate the process, you might consider providing CARCO with a blanket authorization to conduct a criminal history record search at the county of the report subject's current and/or former residences, employment and/or education when delays of this nature are anticipated. While statistics are not available at this time from reputable government sources, it is our belief that the vast majority of criminal history records, if existing, will be located at one of the aforementioned county repositories. This will add some additional cost to the background check, but it may help to alleviate time service concerns if you cannot wait for the statewide repository to complete its search process. Please contact your CARCO customer service representative for further details and associated costs if you are interested in this option.

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  1. Why is it necessary for CARCO to have the applicant's mother's maiden name for criminal history record checks and motor vehicle record checks that are performed in Puerto Rico?
To understand this issue, it is important to know a little bit about the characteristics of Hispanic culture and the use of last names. Most Hispanic people use two last names. In Spanish, the last name is called apellido. Translated to English, this means surname. Surname does not mean "last". Therefore, when you talk about someone's last name, you are talking about their apellidos (surnames), since there are two of them. They are referred to as the first apellido and the second apellido. The first surname is the first surname of the father, and the second surname is the first surname of the mother (generally referred to as the mother's maiden name in the United States).

The second surname, even though it is formally part of the name, is sometimes omitted, much like one's middle name in the United States. However, Puerto Rico observes the custom of its inhabitants maintaining the mother's maiden name throughout the individual's lifetime. Therefore, in order to accurately search criminal history records in Puerto Rico, we must look at the individual's name the same way they do.

Puerto Rico government requires the following to conduct a search:

  • Superior, District and Municipal Courts - Name, including mother's maiden name, date of birth (DOB), and Social Security number (SSN)
  • Police Department - Name, including mother's maiden name, DOB, SSN, and city of birth. Although searches can be done absent the city of birth, for Puerto Rico natives, the city of birth is required.
  • Department of Motor Vehicles - Name, including mother's maiden name, and driver license number. Although a standard first name, last name will be accepted, for Puerto Rico natives, the first and second surnames are required.

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  1. What is the current availability of publicly accessible statewide repositories of criminal history record information? Are they all offered by CARCO?
Approximately seventy percent (70%) of the states offer, via a state law enforcement repository or other official state repository, a publicly accessible statewide criminal history record check. By definition, these statewide checks offer a broader scope of geographical coverage for a criminal history record search and, consequently, may be more desirable for a prospective employer than a county check. CARCO frequently recommends and utilizes many of these statewide repositories where time service is reasonable and quality is high when compared to the county court records search.

It is critically important to know the accuracy and completeness of each of these statewide repositories. The value of these statewide databases is totally determined by the degree and timeliness to which the state, county and municipal law enforcement agencies, as well as the criminal courts, disseminate data to them. Absent knowing this information for each statewide repository, an employer may innocently rely upon these sources, and fail to detect a serious criminal history record. CARCO knows, for example, that some state police databases are so inaccurate and incomplete, that we strongly recommend to our clients not to utilize them, unless they are supplemented with appropriate county court checks.

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  1. In addition to a state-level criminal history record search, are there any other searches that are available to us?
CARCO offers several different search elements to compliment the standard recommended state-level criminal history record search. These investigative elements are noted below. Please contact your Customer Service Representative if you are interested in pursuing one or more of these additional investigative elements.

  • Federal Criminal History Record Check
    A federal level criminal history record check can be conducted at the applicant's listed or developed residences, as well as work or school addresses. Each federal criminal history record check includes a search of federal district records, reports of convictions and/or pending prosecutions with full adherence to state and federal law.

  • Nationwide Wanted Person Check
    An agency housed in the federal government maintains a repository comprised of outstanding "wants and warrants" submitted by municipal, county, state and federal law enforcement agencies. This repository also includes persons wanted by foreign governments that submitted the information via INTERPOL.

    When a "hit" occurs, the agency that submitted the "wants and warrants" information will be notified and action will be taken as deemed appropriate by that agency. It is important to note that federal law prohibits notification of the "hit" to any non-law enforcement agency, including CARCO and/or an employer. Quarterly reports are available to CARCO, which will provide the following statistics: 1) number of records (subjects) submitted; and 2) number of "hits" found.

    The repository will accept files (identifying data) of current employees in the U.S. and overseas, as well as applicants.

  • InterScan™ Database Search
    This check includes a search of: 1) an international law enforcement database identifying persons wanted by international authorities (INTERPOL); 2) a U.S. Department of the Treasury database that lists suspected terrorists, sanctioned terrorist organizations and international narcotics traffickers based on U.S. foreign policy and national security goals; and 3) a U.S. Department of Commerce database identifying person(s) denied from participating directly or indirectly in international business transactions because of terrorist or other illegal activities.

  • Supplemental National Criminal Information Database Search
    This non-governmental database contains over 117,000,000 records covering 37 states and houses current and historical records of arrests, felony and misdemeanor convictions, incarcerations, fugitives, escapees, absconders, sex offenders and probation information. It should only be used as a supplement to the standard county and/or statewide criminal history record search. Investigative results will be provided with full adherence to federal and state laws.

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C. Education Verification

  1. At times the education verification is completed quickly. Yet, at other times, it takes much longer. Why is it so inconsistent?
Educational institutions can present cyclical time service problems for verification purposes. During registration periods, most of the registrar's staff is devoted solely to current student registrations. Verifications are either put on hold until registration concludes, or severely curtailed. Additional slow periods are experienced during the summer months, holidays and other school break periods where schools are either closed or staffing levels are low, thereby limiting the times available for verifications.

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  1. What would cause a situation to occur whereby CARCO would not be able to verify a degree, yet the applicant has produced a copy of his/her degree to substantiate the education level claimed?
During the educational verification process, we provide all pertinent identifiers to the school, including all names used by the applicant, if so noted. Many times, we find that the applicant neglected to advise that (s)he attended school under a different name. It is extremely important to emphasize to the applicant that any other name(s) used during their lifetime should be appropriately reflected on the application. In the event that we are unable to confirm the education in question, and the applicant can supply us with a copy of the degree, we will work with the educational institution to confirm the validity of the document and/or the reason(s) for the discrepancy.

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  1. Is there any special reason why a GED earned in New Jersey takes so long to confirm?
Some states maintain GED records in a central office and require special procedures for verification. New Jersey requires a letter and fee to initiate a manual search. Although CARCO expedites the mailing of these documents to the source, turnaround time for the state is normally between 2 to 3 weeks.

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D. Credit Reports

  1. What procedures should be followed to allow the applicant to get a copy of his/her credit report?
If a credit report was procured by CARCO as part of the background check, the following can occur: (a) if adverse action is contemplated by the employer as a result of information contained in the credit report, prior to taking such action the applicant must be given a copy of the consumer report, including the credit report; or (b) if adverse action is not taken, the applicant may request a copy of the consumer report from CARCO for a reasonable fee. Otherwise, the consumer may request a copy of his/her credit report directly from the credit bureau(s).

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  1. What must the applicant do to correct errors in his/her credit report?
If the applicant believes that there are errors in the credit report, CARCO cannot correct these errors. The applicant must contact the credit bureau(s) directly and seek to have the problem rectified. Upon request, CARCO will provide an updated consumer report to the employer.

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  1. The term "bankruptcy discharged" appears in the credit report. What does this mean?
"Bankruptcy discharged" is a court order granting a discharge to the person named as the debtor. It is not a dismissal of the case nor does it determine the amount of money, if any, the trustee will pay to the creditors. Collection of discharged debts is prohibited. The discharge prohibits any attempt to collect from the debtor a debt that has been discharged. For example, a creditor is not permitted to contact a debtor by mail, telephone, or otherwise, to file or continue a lawsuit, to attach wages or other assets, or to take any other action to collect a discharged debt from the debtor.

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  1. What is meant by the term "HAWK ALERT" in the credit report?
There are three major credit bureaus in the United States: Trans Union, Experian (formerly TRW), and CBI/Equifax. CARCO initially accesses the Trans Union credit report in the investigative process. A unique feature provided by Trans Union is the "HAWK ALERT," which is a flag to let the reader know that there may be some item of information that is inconsistent, though not necessarily adverse. For example, the system would alert the reader to the fact that a SSN was issued in a state other than that of the subject's current residence. Some flags indicate a discrepancy with respect to the address(es) used by the subject for credit purposes (e.g., a commercial address).

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E. Foreign Verifications

  1. Do foreign leads create any special problems that we should be aware of with respect to time service?
Unfortunately, the completion of foreign-based education and employment verifications is somewhat unpredictable. Almost all of CARCO's initial attempts to verify foreign leads are accomplished by telephone. We maintain a multi-lingual staff to handle most language barriers. Further, expanded office hours (Monday through Friday from 8:00 am to 10:00 pm Eastern Time) enable us to effectively handle most time zones. Special arrangements are made with our staff to handle all other calls outside this time period. In addition to telephonic contact, we utilize facsimile and e-mail transmission to augment the process, as applicable. While every effort is made to successfully complete the verification, our ability to do so is largely limited by the sources of information, not by a lack of effort on CARCO's part.

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F: Military Record Verification

  1. We need to verify former military service on one of our applicants. Are there any special forms required to do this in addition to the standard application and FCRA release forms?
The National Personnel Records Center (NPRC) maintains records for former military service members. To obtain information from NPRC, Standard Form 180, "Request Pertaining to Military Records", is required to be completed by the military service member. The fully executed form should then be sent to CARCO for processing. You may obtain a copy of that form by right-clicking the hyperlink above, or you may go directly to the following Web site to print a copy of the form: http://www.archives.gov/research_room/obtain_copies/standard_form_180.pdf.

Please be advised that there is a significant delay in receiving a response from NPRC subsequent to their receipt of the completed SF 180. Currently, we are experiencing a delay of approximately 4-6 weeks. We make every effort to expedite the receipt of this information. However, please realize that we have no control over NPRC's response time, so please be patient. We will keep you updated on the status of the military record verification on a regular basis.

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G. Legal Aspects of Employment Screening

  1. Do the California employment screening statutes apply only to reports covering current California residents?
The federal Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., ("FCRA") governs the acquisition and use of most background information on applicants and employees when used for employment purposes. "Employment purposes" are defined in the FCRA to include hiring, termination, reassignment, or promotion of an applicant or employee. In addition to the requirements of the FCRA, California has two statutes that impact on the employment screening process: the California Consumer Credit Reporting Agencies Act ("CCRAA"), Cal. Civ. Code § 1875.1 et seq., and the California Investigative Consumer Credit Reporting Agencies Act ("ICRAA"), Cal. Civ. Code § 1786 et seq.

The ICRAA does not explicitly identify the scope of its coverage. We have found nothing in that statute, however, which suggests that the notices and disclosures it requires were intended to apply to consumers other than those with a California mailing address.

The CCRAA, which comprises the Title of the California Civil Code immediately preceding the ICRAA, expressly states that the notices and disclosures to consumers provided for in that title need be made "only to those consumers who have a mailing address in California." CCRAA § 1785.6. A similar interpretation of the scope of the ICRAA would be consistent with the Legislature's stated intent in enacting the ICRAA; that is, "to regulate investigative consumer reporting agencies . . . in a manner which will best protect the interests of the people of the State of California." ICRAA § 1786(g).

We note that one could also make the opposite argument; that is, the absence of language in the ICRAA limiting the scope of its coverage to consumers with a California mailing address, arguably could indicate a legislative intent that the ICRAA statute would have broader applicability than that expressly stated in the CCRAA.

On balance, we believe that the most likely interpretation is the former, and that the notice and disclosure requirements in the ICRAA are intended to apply only to consumers with a California mailing address. This conclusion is not only consistent with the Legislature's stated intent to protect California citizens, but it is also reasonable and consistent with the general operation of other state consumer protection statutes.

With that said, however, it is important to understand that there is very little case law available at this time that specifically addresses this complex issue. For employers wishing to comply with the most restrictive state laws on a uniform nationwide basis, it is safest, at a minimum, to comply with the laws of the states where:

  • The individual investigated resides;
  • The consumer reporting agency ("CRA") is incorporated or has its primary place of business;
  • The employer requesting the report is incorporated;
  • The employer has its principal place of business; or
  • Otherwise where the employer receives and actually uses the report for employment purposes.


This information is intended for informational purposes only and is not to be considered legal advice. Please realize that no publication can anticipate all individual situations and questions that may arise. If you have questions concerning your legal rights and obligations under state or federal consumer reporting laws, or any local laws or regulations governing the acquisition and use of applicant and employee information, please consult with your experienced employment law counsel.

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  1. What are the disclosure and authorization requirements under the California law with respect to a California employer who procures a background check on a California resident?
California employers should recognize that the terms "consumer report" and "investigative consumer report" have different meanings under the federal Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., ("FCRA") and the California Investigative Consumer Credit Reporting Agencies Act ("ICRAA"), Cal. Civ. Code § 1786 et seq.

The ICRAA definition of an "investigative consumer report" is much broader than that of the FCRA. The ICRAA defines an investigative consumer report as a consumer report in which information on a consumer's character, general reputation, personal characteristics, or mode of living is obtained through any means. Under the FCRA, an investigative consumer report is a subset of a consumer report, wherein this type of information is obtained through personal interviews.

The ICRAA disclosure/authorization requirements for preparing an investigative consumer report for employment purposes include (also refer to § 1786.16):

  • The person procuring or causing the report to be made has a permissible purpose.
  • The person procuring or causing the report to be made provides a clear and conspicuous disclosure in writing to the consumer at any time before the report is procured or caused to be made in a document that consists solely of the disclosure, that:
    • An investigative consumer report may be obtained.
    • The permissible purpose of the report is identified.
    • The disclosure may include information on the consumer's character, general reputation, personal characteristics, and mode of living.
    • Identifies the name, address, and telephone number of the investigative consumer reporting agency conducting the investigation.
    • Notifies the consumer in writing of the nature and scope of the investigation requested, including a summary of the provisions of Section 1786.22.
  • The consumer has authorized in writing the procurement of the report.


With respect to providing a copy of the report to the applicant, § 1786.16 is summarized as follows:

  • The person procuring the report or causing it to be prepared agrees to provide a copy of the report to the subject of the investigation.
  • Any person who requests an investigative consumer report shall do the following:
    • Provide the consumer a means by which the consumer may indicate on a written form, by means of a box to check, that the consumer wishes to receive a copy of any report that is prepared. If the consumer wishes to receive a copy of the report, the recipient of the report shall send a copy of the report to the consumer within three business days of the date that the report is provided to the recipient, who may contract with any other entity to send a copy to the consumer. The notice to request the report may be contained on either the disclosure form or a separate consent form. The copy of the report shall contain the name, address, and telephone number of the person who issued the report and how to contact them.


 A sample disclosure/authorization form specifically for California residents should be used in addition to the federal FCRA disclosure/authorization forms.

Further, also note that the FCRA is more strict with respect to notice and providing report copies in situations where adverse action will be taken based in whole or in part upon information contained in a consumer or investigative consumer report. An employer is required to follow the pre-adverse action and adverse action notification procedures as dictated by the FCRA.

Also note that the ICRAA provides an exemption of the above disclosure/authorization requirements if the report is sought for employment purposes due to suspicion held by an employer of wrongdoing or misconduct by the subject of the investigation. However, please be careful with this proviso. We have sought legal opinion on this specific matter and it is provided to our clients in the next question, below, for their review and consideration.

This information is intended for informational purposes only and is not to be considered legal advice. Please realize that no publication can anticipate all individual situations and questions that may arise. If you have questions concerning your legal rights and obligations under state or federal consumer reporting laws, or any local laws or regulations governing the acquisition and use of applicant and employee information, please consult with your experienced employment law counsel.

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  1. How should the issues raised by the FTC Informal Staff Opinion in Vail, involving investigations of alleged workplace misconduct, be resolved in California, since FCRA law and California law now seem to conflict with respect to notice and disclosure obligations?
It should be noted that the response to this question is time-sensitive. The FCRA, enacted in 1970 and set to expire Dec. 31, 2003, created a uniform system of rules and obligations for reporting on the credit activity and history of U.S. consumers. On December 4, 2003, President Bush signed into law the Fair and Accurate Credit Transactions Act (FACT) of 2003 (H.R. 2622), which permanently extends the FCRA's uniform national credit reporting standards and amends the FCRA in several key areas.

One important area of change involves clarifying the duties of employers when they use third parties to investigate possible misconduct, e.g., sexual harassment, embezzlement, workplace violence, drug sales and other illegal activities, heretofore undermined by unintended consequences of the 1996 amendments to the FCRA and a 1999 FTC staff opinion letter now known as the "Vail Opinion Letter." The letter stated that the notification and disclosure requirements of the FCRA applied whenever employers hired third-party organizations to investigate allegations of workplace misconduct.

FACT reauthorizes the FCRA with a provision to remove third-party investigations of alleged employee misconduct from the notice and disclosure requirements of the law. However, legislation provides only a limited fix to the problem, since employers will still be required to provide some notification but only after an investigation is concluded (see TITLE VI-PROTECTING EMPLOYEE MISCONDUCT INVESTIGATIONS in H.R. 2622 for further details).

Except as otherwise specifically provided in the Act and the amendments made by the Act, before the end of the 2-month period beginning on the date of enactment of the Act, the Board of Governors of the Federal Reserve System and the Federal Trade Commission (FTC) will jointly prescribe regulations in final form establishing effective dates for each provision of this Act. Effective dates will be established as early as possible, while allowing a reasonable time for the implementation of the provisions of this Act, but in no case will the effective date be later than ten (10) months after the date of issuance of the aforementioned regulations in final form.

Therefore, until such regulations are prescribed, an employer needs to understand that California law and the FTC Staff's interpretation of the federal Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., ("FCRA") are inconsistent on the subject of whether the disclosure requirements imposed upon employers who obtain investigative consumer reports on employees should apply if a report is sought because the employer suspects that the subject may be involved in workplace misconduct. It is our view that if both statutes are applicable, the federal law (see §§ 606, 604(b)(3)) will preempt the California statute (see §§ 1786.16(a)(2), and 1786.16(c)), because the FCRA is more strict than the State law and compliance with the State law would result in a violation of the FCRA.

Thus, as a practical matter, in a situation in which the FCRA disclosure requirements are applicable, the California law would be irrelevant, even if, in the absence of the FCRA, it could apply. If a situation were presented in which the FCRA would not apply, however, a California employer could avail itself of the more liberal California disclosure rules in the context of workplace investigations.

A. The FCRA Disclosure Requirements for Workplace Investigations

FCRA § 604(b)(2) requires employers to obtain the signed authorization of a consumer before obtaining a consumer report for employment purposes. Further, under § 606, if asked by the consumer, employers who have requested an investigative consumer report for employment purposes must also disclose to the consumer the nature and scope of the requested investigation. Finally, if the employer intends to take adverse action based upon the contents of a consumer report, before doing so the employer must first provide a copy of the report to the consumer. FCRA § 604(b)(3). Clearly, these provisions could be problematic in a situation in which an employer is investigating suspected wrongdoing by an employee.1

In FTC Informal Staff Opinion Letters, the Staff has opined that under the terms of the FCRA as written, no information can be redacted from consumer reports that are provided to consumers, and there are no exceptions to the disclosure requirements described above, even if reports are obtained as part of an investigation of suspected workplace misconduct. See, e.g., Vail, FTC Informal Staff Opinion Letter, April 5, 1999 (the "Vail Letter"), and Meisinger, FTC Informal Staff Opinion Letter, August 31, 1999. Members of Congress have criticized this result, in light of its obvious impact on workplace investigations. Legislation has also been proposed to address the problem. To date, however, the FCRA has not been amended.

In dicta, courts have criticized the Staff's position as stated in the Vail Letter, and have noted that such opinions do not have the force of law.2 Nonetheless, in the few reported cases on this subject, courts have approved employers' failures to disclose a workplace investigation only in situations in which the courts found that the reports at issue were not covered by the FCRA.3 Courts may have found such holdings necessary, even if somewhat tortured, because the Staff's position in Vail is based on the wording of the FCRA itself, which includes no exceptions to the disclosure requirements. Moreover, the former Chairman of the FTC, Robert Pitofsky, has endorsed amending the FCRA to address this problem, thus confirming the analysis that the statute, as currently written, arguably requires the result articulated in the Vail letter.

B. The Disclosure Requirements Applicable to Workplace Investigations Under California Law

In the California Investigative Consumer Credit Reporting Agencies Act ("ICRAA"), Cal. Civ. Code § 1786 et seq., the California Legislature attempted to address the disclosure problem that can arise in the context of workplace investigations. Specifically, under the ICRAA, an employer need not (a) obtain the consumer's authorization prior to obtaining an investigative consumer report, or (b) inform the consumer of the nature and scope of the investigation requested, if the report is sought for employment purposes "other than suspicion of wrongdoing by the subject of the investigation." ICRAA §§ 1786.16(a)(2), and 1786.16(c).

C. Conclusion

If a situation were presented in which only California law applied, but not the FCRA, the exceptions to the disclosure requirements in the ICRAA would control, and the Vail Letter would not. Such a situation could be presented, for example, if a California employer conducted an internal investigation itself, without using a CRA. As the law currently stands, however, the conservative approach would be for the employer to make the required disclosures if the FCRA could be held applicable to the workplace investigation.


This information is intended for informational purposes only and is not to be considered legal advice. Please realize that no publication can anticipate all individual situations and questions that may arise. If you have questions concerning your legal rights and obligations under state or federal consumer reporting laws, or any local laws or regulations governing the acquisition and use of applicant and employee information, please consult with your experienced employment law counsel.

1 Employers can lessen the impact of these requirements somewhat, however. First, they can obtain, and retain on file, blanket authorizations from employees when they are hired. This would satisfy the initial notice requirement, and would eliminate placing the suspect employee on notice when a report was actually requested later. Second, the FCRA disclosure requirements are only triggered if an employer requests a "consumer report" as defined in the FCRA. Thus, if the employer conducted an investigation internally, or used, as its agent, an entity that did not qualify as a CRA, the FCRA disclosure requirements imposed upon employers would not be triggered.
2 See, e.g., Hartman v. Lisle Park Dist., 158 F. Supp. 2d 869, 875-77 (N.D. Ill. 2001) (the FTC letters are "unpersuasive"; "entitled to respect but not deference"); Johnson v. Federal Express Corp., 147 F. Supp. 2d 1268, 1272 (M.D.Ala. 2001) (the Vail and Meisinger letters are "not binding and not persuasive" and "serious separation-of-powers issues arise when courts blindly follow informal opinion letters"); Robinson v. Time Warner, Inc., et al., 187 F.R.C. 144, 148 n.2 (S.D.N.Y. 1999) ("Unofficial FTC staff letters, while they may perhaps offer helpful guidance to the courts in interpreting the FCRA, are only advisory, and do not govern the scope of [the statute]").
3 See, e.g., Hartman v. Lisle Park Dist., 158 F. Supp. 2d 869 (N.D. Ill. 2001) (the investigative report prepared by a law firm acting as the employer's agent was outside the scope of the FCRA because it involved only the employee's dealings with the employer); Johnson v. Federal Express Corp., 147 F. Supp. 2d 1268 (M.D.Ala. 2001) (report on an investigation of an employee's handwriting was not a consumer report because it falls within the FCRA's "transactions or experiences" exclusion from the definition of a consumer report as it was based entirely on information provided by the consumer to the employer, and because the employer's agent was not a CRA).

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  1. Can CARCO provide us with a summary of the changes recently made to the federal Fair Credit Reporting Act (FCRA) concerning the Fair and Accurate Credit Transactions Act of 2003, signed by President Bush on December 4, 2003 (FACTA)? There are myriad revisions to the FCRA and it would be helpful to have a brief summary of each title in FACTA.
FACTA is quite voluminous and it is very difficult to capture the full breadth of the changes to the FCRA absent reading FACTA (also referred to as H.R. 2622 and/or Public Law # 108-159) and the FCRA (as amended by FACTA and effective December 4, 2003) in their entirety. However, in an effort to assist you in further understanding the impact of this major legislation and its impact on the FCRA, we have prepared a brief summary of each title in FACTA.

Also, please refer to the FTC Announced Action for December 16, 200 with respect to effective dates for provisions of FACTA that do not contain effective dates.

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  1. How can I obtain a copy of the federal Fair Credit Reporting Act (FCRA)?
You can obtain a copy of the FCRA from the Federal Trade Commission (FTC), the U.S. agency responsible for regulating the FCRA. The FCRA can be downloaded from the FTC's Web site http://www.ftc.gov/os/statutes/031224fcra.pdf. This document is in PDF format, which requires Adobe(R) Reader(R). To download a free copy of Adobe(R) Reader(R), if it is not installed on your personal computer, go to http://www.adobe.com/products/acrobat/readstep2.html.

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  1. Do I have to follow the standard FCRA employee notice and authorization requirements if I hire third-party organizations, including law firms, to investigate allegations of workplace misconduct? Also, are there any differences between federal and state law in this type of investigation?
Over the years, there have been many conflicting federal and state statutes governing third-party investigations of employees suspected of misconduct. Several different FAQ and Legislative Updates on the CARCO Web site have addressed such issues at varying times. However, with the recently enacted Fair and Accurate Credit Transactions Act of 2003 (FACT Act), the answer to this questions has been cleared up -- to an extent.

As you know, the FACT Act contains a number of provisions that clarify or address rights under the federal Fair Credit Reporting Act (FCRA), 15 U.S.C. 1681 et seq., that are self-effectuating but that do not contain a specific effective date. One such area of change involved clarifying the duties of employers when they use third parties to investigate possible employee misconduct, e.g., sexual harassment, embezzlement, workplace violence, drug sales and other illegal activities, which were undermined by unintended consequences of the 1996 amendments to the FCRA and a 1999 FTC staff opinion letter now known as the "Vail Opinion Letter."

As a point of historical review for those who may not recall the issue, the Vail Opinion Letter stated that the notification and authorization requirements of the FCRA applied whenever employers hired third-party organizations, including law firms, to investigate allegations of workplace misconduct. This created quite a furor in the employer community. At the time, the FTC followed up on this "hot" issue and opined that, where allowed by law, employers could work around the awkward prospect of having to ask a suspected wrongdoer for permission to allow a third party to provide an investigative (or other) consumer report to the employer by routinely obtaining - at the start of employment or while employed - a general or "blanket" authorization from the consumer to obtain consumer reports or investigative consumer reports at any time during the consumer's tenure of employment. Thus the employer would be allowed to conduct its investigation confidentially without alerting the employee until the employer is prepared to confront the employee with its findings.

The FACT Act reauthorized the FCRA with a provision to remove third-party investigations of alleged employee misconduct from the notice and authorization requirements of the FCRA. However, legislation provides only a limited fix to the problem, since employers will still be required to provide some notification but only after an investigation is concluded

On February 11, 2004, the Board of Governors of the Federal Reserve System and the Federal Trade Commission jointly determined that March 31, 2004 would be the effective date for, inter alia, the section addressing investigations of suspected misconduct relating to employment. Therefore, until that time, realize that the FTC Vail letter interpretation is still in place.

Notwithstanding the provisions of the FACT Act, CARCO recommends to its clients that the authorizations/disclosures obtained from employees and prospective employees continue to include a blanket clause allowing employers to obtain consumer reports and investigative co