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21

Adverse information on a background check

If you read the Fair Credit Reporting Act (FCRA) as much as I do (insert nerd joke here), you might know that it allows non-conviction criminal information to be reported for up to seven years. One question that occasionally comes up is, when does the clock start on the seven year count? According to a recent brief filed jointly by the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC), your count may be wrong.

The Issue

At the heart of the issue is the FCRA provision dealing with obsolete information that limits how far back a consumer reporting agency (CRA) can report adverse information in a background check. In a recent amicus brief filed in the U.S. Court of Appeals for the Ninth Circuit on October 4, 2013, Moran v. The Screening Pros LLC (Case No. 12-57246), the FTC and the CFPB tag team on the issue, saying that the clock starts when the adverse information is first filed or entered into the record.

In general, an adverse item of information is reportable only if it antedates the report by seven years or fewer. 15 U.S.C. § 1681c(a)(5).  The report in this case, made in 2010, listed (among other items) a misdemeanor drug charge from 2000 that was dismissed in 2004. The lower court concluded that the drug charge could be reported for seven years from the date the charge wasdismissed. The FTC and CFPB are saying that the trial court decision was wrong—rather, as a result of a 1998 amendment to the FCRA, the seven year reporting period for the dismissed drug charge should have started on the date of the charge and therefore ended in 2007.

Original FCRA Language

In the original FCRA, “[r]ecords of arrest, indictment, or conviction of crime” were reportable for seven years, starting at the “date of disposition, release, or parole.”  The amendments to the FCRA in 1998 deleted this paragraph. The amendment moved “records of arrest” to paragraph (a)(2), which now limits the reporting of “[c]ivil suits, civil judgment, and records of arrest” to seven years “from date of entry,” 15 U.S.C.§ 1681c(a)(2).  The agencies argue that the adverse event in this case is the charge—not the subsequent dismissal of the charge:

the dismissal is not an adverse item that starts its own seven-year reporting period. It is simply the disposition of a truly adverse item, the underlying criminal charge.”

The old rule from the original FCRA is still being followed by some. Interpretation of the amendments has not been crystal clear, and commentary and interpretations by the FTC over the years have muddied the waters.

Reporting Convictions

While the court has yet to rule in this case, everyone can agree that the 1998 amendment removed criminal convictions altogether from the restriction on reporting obsolete information. So the FCRA has no time limitation on reporting criminal convictions. However, some states have limitations on the length of time records may be reported. In addition, many employers limit the use of older convictions for other, non-FCRA reasons. The use of older convictions may not pass the scrutiny of the Equal Employment Opportunity Commission (EEOC) for being job related and consistent with business necessity.  The EEOC guidelines state that an employer must consider the amount of time that has passed since the offense was committed when deciding whether to use the information in an employment decision.

So what does it all mean? A few quick take-aways:

  • Employers (and landlords) should review your policies on using non-conviction information. If you want to consider records of arrest resulting in dismissals and other non-conviction type records, you should check with your background screening provider to see how the time is being calculated, and take into consideration state law restrictions.
  • Employers should also consider how older records are relevant to specific positions.  The EEOC guidance says that employers must consider the time that has passed since the offense was committed and determine whether the offense is relevant to the job. If older offenses are important to you, document the resons why in the job description and policy.
  • CRAs should review their practices on the reporting of dismissals pursuant to section 605(a).

This brief certainly shows which way the wind is blowing with the CFPB and the FTC, and may lead to future rule-making on this subject. If you would like a copy of the brief, please send a request to askangela@employeescreen.com, and as always, I am interested to know what you think of the FTC/CFPB position.








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21 Responses to “Counting to Seven: The 7 Year Rule for Reporting Adverse Information on a Background Check”

  1. Shawn Ekblad says:

    I wonder if there has been consideration given in regards to the states that do limit convicitions to 7 years. If the suggested commentary to begin the 7 year count upon the date of the charge is applied there may be instances where the conviction may be removed from the report at the same time or even before the individual has completed serving the sentence/parole for the conviction.

  2. This was very informative and relevant information.

  3. […] our second article, Counting to Seven: The 7 Year Rule for Reporting Adverse Information on a Background Check, Angela discusses the confusion in the seven year rule for reporting adverse information on […]

  4. Michael Saltz says:

    Shawn, the answer to your question is that the 7-year rule does not apply to convictions under the FCRA. One would only be serving a sentence or be placed on parole if they were convicted of a crime. There currently is no Federal limit in reporting convictions. Thus, depending what state you are in, the conviction information will normally be reportable 7 years from disposition, release or parole (whichever is later).

    The issue here is: How are dismissals handled? The FTC and CFPB have now, for the first time, taken the position that the FCRA has made a wholesale change to the counting of dismissals that departs from the original theory of counting from the date of the dismissal to the counting of the date of the charge.

    The problem with the CFPB’s and FTC’s position is that it is pure speculation: Congress did not say that such was their intent and they never bothered to tell anyone that they intended to change the counting period for dismissals. They especially did not tell any of the states that the rule had changed because nearly every state that regulates the reporting of criminal records limits the reporting to 7 years from disposition, release or parole. Dismissals are dispositions.

    As such, the CFPB and the FTC are now trying to make up policy by bootstrapping dismissals to the filing date of the criminal charges based on the following logic: They state that the reporting of a dismissal of a criminal charge is not adverse information. But, in reporting the dismissal, you are in essence also reporting the filing date of the criminal charge, which is adverse information. Thus, the CFPB and FTC are taking the position that if you report anything that necessarily exposes the existence of prior adverse information in your effort to achieve maximum possible accuracy, your ability to report such information is controlled by the date triggered by the old adverse information and not the date of the actual event your are trying to report (even if the new event is not adverse to the consumer).

    I hope this clears up the issue for you.

  5. shannon says:

    I live in Washington State, but was convicted In 2003 in AZ. Because my fine was so big, my probation was extended last year. I have never had a problem finding work since the crime was over 10 yrs, but now my crime showed up by ADP saying that since my probation was extended my 7 year started over. So now I’m told that I will always show up in any back ground check for the next 7 years. Is this seriously true?

  6. JP says:

    The FCRA ruling on reporting convictions seems to be very “open to interpretation”. In Texas the 7 year limitation applies but it still leaves it open to the reporting agencies interpretation as to when the 7 year clock should start. Example:1994 robbery conviction. Sentenced to 15 years prison. Served 8 years prison and released from prison in 2002. Was paroled in 2002.

    So according to the guidelines in Texas/FCRA for a reporting agency to be able to report this information on a background report the adverse information needs to be 7 years or younger from the date the report was run. In the above noted case:
    Date of disposition: 1994
    Release from prison: 2002
    Paroled: 2002
    Total completion of sentence: 2009

    I don’t see anywhere in the verbage where the reporting agency can choose to combine 2 of the criteria: 1. release and 2. paroled to come up with the guideline 7 years from “release from parole”.

    How is this fair? What can a person do who has been affected by a reporting agency reporting on a background check a conviction from 1994 that has a disposition date of 1994 but it still being reported on a 7 year background screening in 2013?

  7. Name GH says:

    So if a conviction date (in Texas) is 2004, but they served time and got out of prison in 2011, do I use 2004 and say he is eligible for hire because the 2004 date is longer than 7 years ago, or is he NOT eligible because it should be 7 years AFTER 2011 release date from prison (which would make him eligible in 2018)?

  8. Nick Fishman says:

    Thank you for your message. There is no such exemption for convictions in the state of Texas. This would just apply to non-convictions. Therefore, the conviction can factor into your hiring decision regardless of the age. Just make sure to consider the nature of the crime and how it impacts job responsibilities, the severity, if the person has multiple convictions and any other mitigating circumstances.

  9. Kelly says:

    I am undergoing a background check. I have a misdemeanor DUI in California and the county criminal goes back 7 years for this company doing the background check. Does the county criminal go 7 years from violation date, or 7 years from disposition date? If it is 7 years from the violation or offense date it has been more than 7 years and shouldn’t show up, correct? Thank you.

  10. Hi Kelly,
    Thanks for the question. The situation referred to in the article deals with non-convictions and dismissals, but since you are in California, and since this is a conviction, it would be report-able seven years from the disposition of the case.

  11. Name says:

    If an applicant lives in a non 7 year restrictive state do I benefit from the 7 year restriction for a state that does? For example, I live in Texas but have a conviction in CA over 7 years, can this be reported in Texas?

  12. john l says:

    I was just offered a position today and they will obviously be doing a background check. I have a 3rd felony theft from Oct. 2007 that resulted in deferred adjudication. I was released from probation in may 2009 and I’m eligible to get my record sealed this May 2014. Does the 7 years just count years or from the actual date of the arrest. 7 Years from 2007 would put me okay in 2014 if they count years as a whole correct? If they count from the actual date of arrest then my records getting sealed would actually come up before so the 7 year rule was pointless in my particular case.

  13. The seven year situation in the article deals with non-convictions. The answer to “name”, above, depends.There is no seven year restriction for employers in Texas. However, it is not likely that the California conviction would be reported beyond the seven years. Much depends upon the employer and the sources they are using, as well as the reporting policy of the background screening company. Best to seek counsel and consult with an attorney for these close calls.

  14. Name says:

    My company recently did a fcra on me I live in texas been with my company 11 yrs and my felony is 23 yrs ago and it still showed up I didn’t lose my job however they told me there is no statue of limitations in texas the seven yr rule is bull crap

  15. Sally says:

    The 7 year rule DOES NOT exist it is a SHAM…
    I went in for a back ground check in January 2014, my 23 year felony showed up & I asked about the 7 year Law Mr. Geib laughed at me. Mr. Geib from Intercept informed me that the employer would receive the information. Well I didn’t get the job to say the least. I live in California so all felons good luck I guess we are suppose to pay the price FOREVER….

  16. Jess says:

    I live in Utah. I am undergoing a background check for employment that means the world to me. from 2005 to 2008 I was charged with many charges. I did a LONG term treatment (22 months)and diversion program, all of my charges were dismissed in 2011. ADP told me these charges would not show up, they were all dismissed w prejudice. This October will be 6 years clean for me I has worked my butt off to change my life, pay my debt and continue to work hard to give back to my community! Does anyone know if this is true?? Twice ADP has told me they do not report the dismissed charges but they certainly did in 2010…11pages and I was denied emp. They are all drug related, no crimes against people or any violent anything…WORRIED

  17. cris beckett says:

    Hello… I am trying to confirm CRIMINAL BACKGROUND CHECK terms that apply for state licensing to be a insurance broker relating to California… Can someone please help with the following questions…

    How many years will a background check include on the “rap sheet?”

    Per/ state licensing; Is this a criminal back ground compiled from state level or FBI?

    I had a misdemeanor in 2002 that was expunged in 2005. Is it reported in California from date of arrest or expungement?

    Is a DUI conviction an automatic denial for a brokers license in California?

    Thank you & value any advice!

  18. Political Prisoner says:

    In july 2004 I was convicted of a felony related to marijuana sales in california where i live. In 2012 I had applied for a job here in california.

    After multiple interviews for the position, I was notified that i had been hired out of about 15 people who also interviewed for the job, I was VERY happy!!

    But, they first had to do a background check………. and I hoped that my felony would not show up since it had been 7 years since my conviction. Though, i was worried about specific wording that states:

    [r]ecords of arrest, indictment, or conviction of crime” were reportable for seven years, starting at the “date of disposition, release, or parole.”

    Therefore I was not sure when the seven years started.
    Did it start from teh date of my arrest in november of 2003?
    Or did the 7 year rule start from the date of my conviction in july of 2004?
    Or perhaps the 7 year rule started from the date of my release from prison in may of 2005?
    Or maybe the 7 year rule started from when I completed parole in june of 2006??

    Well, after waiting about a month to receive the background check that was done by a third party company (sterling), I was denied the job as my felony showed up.
    Therefore, it is clear to me that the 7 year rule STARTS from the date of ones release from parole/probation. So, i have been unemployed for many years now and I cannot even receive food stamps since I had been convicted of a “drug” crime. It has now been over 7 years since I have been discharged form parole so I am hoping that my felony does not show up again when I start looking for a job again.

  19. william says:

    Consumer reporting agencies may not report outdated negative information. In most cases a consumer reporting agency may not report negative information that is more than 7 years old.But then it says that records of convictions of crimes can be reported regardless of when they occurred. It gives both these statements in the FCRA, So which one is it? This sounds like a contradiction to me!I was convicted of a non violent felony in 1982 and even though I paid my debt to society 32 years ago I am still being punished for it today may 6th 2014,maybe the government would like for us to commit more crimes just to try to stay alive,Man this is one screwed up nation and every day that I live in it the more I despise this country, The government purposely blocks ex convicts from actively seeking employment by allowing companies and corporations to view our personnel information and bar us from earning a living.

  20. william says:

    I could see that it would be fair to report class x felonies such as pedophiles, murderers, rapist but if you are not a violent person and not likely to commit another crime in your lifetime the information in your criminal history should only be available to law enforcement and not the general public but the government allows this to slide because of the bribes er I mean campaign contributions that they receive from the credit reporting industry and at the same time there are no bigger criminal entities than corporations, Read the constitution, For the corporations by the corporations of the corporations, God curses the united states in it’s present form.

  21. Brian says:

    I was originally quite confused by this rule, but this has cleared things up for me. Thanks for the informative post.

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