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The Credit Rules are Anything But Fair

January 5, 2001
Related Topics: Miscellaneous Legal Issues, Featured Article
You have an employee who is violatingcompany policy and you need to gather evidence to support appropriate action.Whether that person is harassing another employee, making threats or engaging incriminal activity on company property, you need the help of an outsideinvestigator. But, before you begin the investigation, you must first ask theemployee’s permission to conduct it. If he agrees, you must give him acomplete copy of the investigative report that you receive.

    If you think this sounds completelyillogical - even dangerous - you’re not alone. But, read the Fair CreditReporting Act [ FCRA, 15 U.S.C. 1681 et seq.]. Investigations that can have anegative impact on the person’s employment status must meet theserequirements.

    Congress passed the FCRA in 1996 withlittle thought given to the consequences. What was supposed to give consumersthe right to refuse and/or review investigation into their credit history hasbeen inflated to include employees who now have the right to do the same for aninvestigation into their activities, including criminal escapades. Thisoriginates in Europe where the European Union has severe privacy restrictionsamong commercial entities. In order to do business with them, U.S. companiesmust follow suit. This is the FTC’s way of ensuring compliance.

Imagine having to ask a male employee, who is reportedly harassing females, if it is okay to investigate him.

    But, that may leave you in a box. Onone hand the government says that you must maintain a safe and secure workplace(e.g. OSHA). On the other hand, you’re severely restricted from doing justthat when you use any third-party defined by the FTC as a “Credit ReportingAgency (CRA).” Companies that use their own security personnel forinvestigations have no such restrictions because they are not using a CRA.However, the vast majority of companies without a professional on staff mustrely on outside investigative help.

    Imagine having to ask a male employee,who is reportedly harassing females, if it is okay to investigate him. If hesays no, he has still been tipped off about the complaints. He knows who he’sharassed. These women could be in jeopardy at work and everywhere else. If hegives his permission to investigate, he knows he’ll get an unedited, completecopy of the report that includes names and allegations. It’s like giving him ahit list.

    This leads to erosion of employeemorale and a lack of confidence in HR and the company. It sends a message thatyou are powerless to stop drug use, harassment, threats, extortion, theft, arsonany other illicit activity at work. Other employees, seeing few consequences,will feel free to take advantage of your predicament. Cases are alreadysurfacing that prove wrongdoers are using the FCRA as a shield and are alsoobtaining financial judgments against unsuspecting employers. Time to thinkoutside the box…

“In all fighting, indirect methodswill be needed in order to secure victory. Make your way by unexpected routes,and attack unguarded spots.”

- Sun Tzu, The Art Of War.

    You can strengthen your position inseveral ways. First, have all job applicants sign a waiver allowing you toinvestigate their possible role in suspected illicit activities (once they areemployed) as a condition of employment. Have them waive the right to an uneditedreport as well. Having current employees sign such forms may be a problem, butpresent it in terms of preserving THEIR security in the workplace, as mandatedby OSHA and other agencies.

    Second, consider bringing in anexperienced, licensed investigator to act as a consultant, should you need aninvestigation. The detective can show you or one of your chosen employees how toproceed, what questions to ask, etc., as long as he/she doesn’t actuallyperform the work or submit a report. As a consultant, they are a teacher, not aCRA.

    Finally, write and call your U.S.congressman and senators and tell them to get behind bills meant to modify theFCRA and allow companies to maintain a secure workplace. Log onto www.ftc.govand get the details of the Fair Credit Reporting Act for yourself. Forewarned isforearmed.

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