Outside Employee Investigations Must Comply with the Fair Credit Reporting Act

The Federal Trade Commission has determined that an employer who hires an outside firm to conduct an employee investigation must comply with the Fair Credit Reporting Act (FCRA). Typically, these obligations are triggered when the need arises to conduct an employee misconduct investigation, such as a sexual harassment investigation. In 1998, the U.S. Supreme Court held that an employer who implements an anti-harassment policy, trains its employees regarding the policy and promptly investigates harassment complaints, may establish an affirmative defense to a sexual harassment suit.

However, while employers must respond promptly to harassment complaints, most employers do not possess the resources to properly conduct an investigation of this type. As a result, these employers hire outside firms to conduct their investigations, triggering the requirements of the FCRA. Specifically, the FCRA requires such an employer to notify the alleged harasser in advance that the outside firm will be conducting an investigation and provide the alleged harasser with copies of the investigation report. In addition to these and other disclosure requirements, the employer must obtain signed authorization from the alleged harasser prior to conducting the investigation. Not only are the FCRA's requirements complex, but they impede the employer's ability to conduct a thorough investigation by allowing alleged harassers ample opportunity to cover their tracks and intimidate witnesses.

Conversely, an employer who conducts its own employee investigation is not required to comply with the FCRA. If your company was faced with a harassment complaint would you know how to proceed with a proper investigation, enabling you to build a solid defense to a harassment lawsuit? Momkus Ozog & McCluskey's employment law attorneys can provide you with detailed guidance, allowing you to investigate your own complaints and avoid the pitfalls of the FCRA.