FCRA stands for Fair Credit Reporting Act, a federal law that regulates how consumer credit reports are collected, used, and shared1. It aims to protect consumers from inaccurate or unfair information in their credit reports.

Employer Guidance on Revised FMLA Forms

On July 17, 2020 the US Department of Labor issued new optional Family and Medical Leave Act (FMLA) forms. The FMLA is a federal law that permits eligible employees with qualifying medical conditions to take up to 12 workweeks of unpaid leave. According to the DOL, the two-step forms will make it easier for employees and employers alike to comply with the law.

Step 1 (Form WH-381): Is an employee eligible for FMLA leave?

When an employee requests FMLA leave or when the employer learns that an employee’s leave could fall under FMLA, the employer is to issue the WH-381 form. The form notifies the employee of their eligibility for FMLA leave and outlines their rights.

Step 2 (Form WH-382): FMLA verdict

After the employee returns the WH-381 form, the employer must review it and inform the employee of its decision within 5 business days. Form WH-382 allows employers to notify employees of the FMLA verdict: Approved, Not Approved, or Additional Information Needed. If approved, the employer would also include on the form the estimated duration of FMLA leave. If not approved, the employer must indicate why the request was denied. And if additional information is needed, the employer may specify what else they need to certify the decision.

In addition to these forms, the DOL also published additional resources that employers may find helpful when issuing FMLA leave:

Certification of Healthcare Provider for a Serious Health Condition

Certification of Military Family Leave

The DOL has designated the revised FMLA forms as optional and employers are permitted to create their own versions. But if they do, they must ensure that they communicate all the necessary information to the employee requesting FMLA leave.

Independent contractors and the FCRA

Must employers provide the protections required by the Fair Credit Reporting Act (FCRA) to prospective independent contractors? 

Not according to a new decision from an Iowa court (see Smith v. Mutual of Omaha Insurance Company, No. 4:17-cv-00443 (S.D. Iowa Oct. 4, 2018)) which grappled with the question in the context of a lawsuit filed by an individual against an insurance company where he applied to contract as a salesperson but was rejected because of a falsely reported felony in his background check. The plaintiff accused the insurance company of violating the FCRA by failing to provide him with the statutorily required prior notice that the background check resulted in his not being hired.    

The insurance company asked the court to dismiss the lawsuit, claiming that the FCRA only requires such notice when an applicant seeks to be hired as an employee, and not as an independent contractor. Since the plaintiff applied for an independent contractor position, he was not entitled to the protections of the statute, the insurance company argued. 

The plaintiff countered that he was applying to be an employee of the insurance company and that it was too early to dismiss the case, as further discovery was needed. In the alternative, he argued that the FCRA should still govern his relationship even as an independent contractor.

In ruling on the FCRA issue, Judge John Jarvey began with the language of the law. The FCRA is a broad statute, Judge Jarvey said, and some of its most stringent protections apply when a background check is being obtained “for employment purposes.” 

The definitions section of the FCRA, at 15 U.S.C. § 1681a(h), states that “[t]he term ‘employment purposes’ when used in connection with a consumer report means a report used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.” This text “makes clear that the pre-adverse action notice requirement only applies when a consumer report is used for employment purposes,” Judge Jarvey wrote. “The meaning of ‘employment purposes’ is specifically defined in the statute, and it is defined as being ‘used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.’”  District courts in Ohio and Wisconsin have reached the same conclusion, Judge Jarvey noted, citing the decisions for support. 

Notably, the Federal Trade Commission (FTC) in its 2011 staff report entitled “40 Years of Experience with the Fair Credit Reporting Act” provided a seemingly contrasting interpretation. The FTC stated that “the term ‘employment purposes’ is interpreted liberally to effectuate the broad remedial purpose of the FCRA and may apply to situations where an entity uses individuals who are not technically employees to perform duties. Thus, it includes a trucking company that obtains consumer reports on individual drivers who own and operate their own equipment; a title insurance company that obtains consumer reports on individuals with whom it frequently enters into contracts to sell its insurance, examine title, and close real property transactions; or a nonprofit organization staffed in whole or in part by volunteers.” 

The FTC’s view can be reconciled with that of Judge Jarvey’s by taking the approach that the applicability of FCRA’s requirements depends on the facts and circumstances of the particular relationship, rather than the formal designation of someone as an independent contractor. 

Given the still remaining disputed issue of whether or not the plaintiff would have been an employee or an independent contractor for the insurance company, the court ordered limited discovery on the issue and declined to dismiss the suit.