Fair Credit Report Amendment To Correct Problem (Which Might Never Have Existed) On Sexual Harassment Investigations Signed Into Law By President Bush

Posted 10:53 AM by Michael Fox

How lawyers can make a mountain out of a mole hill. On the occasion of my 48th birthday, although I do not believe this was anything other than happenstance, a Federal Trade Commission staff attorney responded to a private sector lawyer's inquiry to the FTC, by opining that a sexual harassment investigation conducted by a 3rd party met the definition of a consumer report under the FCRA, thus invoking a number of requirements under the FRCA including obtaining permission of the person to be investigated and providing the subject of the investigation a copy of the report prior to taking any adverse action. The letter concluded, as did all such opinions, that -- This is an informal staff opinion and is not binding on the Commission."

Although it is unknown, at least to me, what prompted this inquiry, I am not aware of any reported instance where a claim had successfully been brought or even been asserted that the failure to comply with the FCRA in connection with a sexual harassment investigation by a third party was illegal under the FRCRA. Having started the ball rolling however, and still as far as I am aware any reported case where this had proved to be an actual problem, yet another private lawyer inquired about implementing the FCRA provisions in connection with a 3rd party investigation, and received a similar non-binding letter that it was impermissible to redact any information from the report before giving it to the person being investigated.

Given these two non-binding opinions, the purveyors of legal information, in this case primarily management side employment lawyers' went into full swing to notify all concerned about this "development". A smattering of such reports derived from just the first page of a google search gave us the following headlines: SEXUAL HARASSMENT INVESTIGATIONS MAY BE SUBJECT TO FCRA; FEDERAL TRADE COMMISSION FLEXES ITS MUSCLES IN THE EMPLOYMENT ARENA; The FTC Says Sexual Harassment Investigators Must Comply With the Fair Credit Reporting Act ; The New Sexual Harassment Pitfall: The Fair Credit Reporting Act and Sexual Harassment Investigations and on on. In full disclosure, I am sure that I too wrote or at least made similar proclamations.

As a result, substantial attention to this problem, that still as far as I know had never resulted in a successful claim being made under this theory, on the part of the Society for Human Resource Management and others have led to a legislative fix. Yesterday, President Bush signed into law the Fair and Accurate Credit Transactions Act of 2003 which contains § 611 to resolve the problem, although that particular piece didn't make it into the Fact Sheet released by the White House.

So more than 5 years after we started down this road, and killed no telling how many forests to get the word out about the problem that could have been, we can now all sleep better knowing that this is one dragon that has been slain. At least until we get to comment on the regulations that no doubt will follow.

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