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backgroundchecks.com Legislation and Compliance Update - FTC Says Screening of Volunteers is for Employment Purposes Under the FCRA

By Michael Klazema on 7/21/2011

In its newly issued staff report that updates its guidance under the Fair Credit Reporting Act (FCRA), the Federal Trade Commission (FTC) says that the term employment purposes includes “a nonprofit organization staffed in whole or in part by volunteers.” (See page 32 of the report.)

The sources cited in the footnote for this assertion do not support it. The first source cited there is Hoke v. Retail Credit Corp. in that case, the court construed the words employment, promotion, and reassignment in the definition of “employment purposes” have “specific meanings in the area of activities for the production of income.” By definition, volunteering is not an activity for the production of income. The other two sources that the footnote cites, the Allison and Solomon information staff opinion letters, both deal with cases in which the activity in question was income-producing (independent truck drivers in Allison and title insurance agents in Solomon).

However, courts often defer to the FTC’s guidance on matters under the FCRA. Therefore, anyone who screens volunteers should consider immediately adopting the practices related to employment-purpose screening, including disclosure, authorization, and pre-adverse-action notices.

Please see below for links to the documents referenced in this update:

For more information on the new guidance from the FTC, please see our previous update titled FTC Issues New Guidance on FCRA. For more information on how this update may affect your program and how backgroundchecks.com can help, please contact client services.


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