May 20, 2005 / Issue No. 2-05
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Register NOW for the June 9-10 HR Forum!
STP Instructor Training Workshop to Take Place June 10-11
AGC Labor and Employment Law Council Holds 21st Annual Symposium
Union Contractors Meet Operating Engineers’ New President
Open Shop Contractors Discuss Current Concerns
Heavy & Highway Alliance Executive Speaks About National Project Agreement
Carpenters Cancel Agreements with Iron Workers and Sheet Metal Workers
Contractor Lawfully Repudiated 8(f) Agreement During Contract Term
Secret Negotiations Justified Contractor’s Withdrawal From Bargaining Unit After Accepting Multiemployer Agreement
Employee Can Be Fired for Refusal to Authorize Credit Check
New USERRA Posting Requirement Now in Effect
Distance Between Work Sites for Determining FMLA Coverage is Measured by Public Roads, Not Linear Distance
DOL Releases Database of Available College Students with Disabilities
NLRB Offers Online Answers to FAQs

  Employee Can Be Fired for Refusal to Authorize Credit Check
An employer lawfully terminated an employee who refused to sign a statement authorizing the company to obtain “investigative consumer reports,” the U.S. Court of Appeals for the Third Circuit (DE, NJ, PA, VI) has held in an unpublished (nonprecedential) opinion.

The employer, Sycamore Manor Health Center (Sycamore) asked its employees to sign an “Annual Statement of Personnel Policy Understanding.”  The statement would authorize Sycamore’s parent company, Presbyterian Homes, Inc., to obtain “investigative consumer reports” that “may involve personal interviews with sources such as neighbors, friends, or associates” for “employment related purposes only.”  When employee Lisa Kelchner refused to sign the statement, she was told that signing was a condition of continued employment.  Because she continued to refuse, her work hours were reduced to zero.  Later, Presbyterian Homes sent her a revised statement, which sought authorization to obtain “consumer reports” containing information relating to “credit standing, character, general reputation, personal characteristics, or mode of living” for the purposes of investigating theft, insurance fraud, or “other forms of dishonesty.”   Kelchner again refused to sign, and her employment was terminated.

Kelchner filed a class action, claiming that the company violated her rights under the Fair Credit Reporting Act (FCRA).  The court dismissed her claims.  The FCRA provides that, if certain conditions are met, credit reports may be issued to employers for “employment purposes.”  The statute defines “employment purposes” as those relating to evaluation of a consumer “for employment, promotion, rassignment or retention as an employee.”  Kelchner argued that the company had no valid purpose for investigating her.  The court noted that the company did not actually obtain a credit report on Kelchner but only sought authorization to do so in the future, if and when the need arose.  It found that the company identified valid employment purposes as potential needs for such an authorization.  The court was persuaded that the company’s ability to effectively investigate allegations of theft, fraud, and other dishonesty would be substantially impaired if the company had to wait until the investigation was underway before it could obtain the employee’s authorization.  The court further held that the FCRA unambiguously permits an employer to secure an authorization to obtain a consumer credit report at any time during the employment relationship prior to procuring the report. 

Finally, the court held that the FCRA does not prohibit an employer from taking adverse action – including termination -- against an employee or applicant who refuses to authorize the employer to procure a consumer report.  

Kelchner v. Sycamore Manor Health Center, Case No. 04-2552 (3rd Cir., 3/3/05) (unpublished). [ return to top ]