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Kelchner v. Sycamore Manor Health Center

135 Fed.Appx. 499, 2005 WL 503774 (3rd Cir. 2005)

EMPLOYER-EMPLOYEE; CREDIT REPORTING—Under the Fair Credit Reporting Act, credit reports may be issued to employers for “employment purposes” at any time if authorization was given by the employee, even in blanket form, before the report is requested.

An employee sued her former employer, a nursing home, for violating the Fair Credit Reporting Act (FCRA) by requiring all employees to submit a signed, blanket authorization permitting the employer to check the employees’ credit history. The employee refused to sign the authorization. Her employment was terminated when, after an additional request and a warning that she would be fired if she did not sign the authorization, she refused to sign the authorization. The employee claimed that: (1) her former employer had no valid employment purpose for requiring a credit report authorization; (2) her former employer could not require employees to fill out a blanket authorization; and (3) she should not have been fired for refusing to sign the authorization. The lower court granted summary judgment against the employee and she appealed. The Court of Appeals affirmed. It found that, under the FCRA, credit reports may be issued to employers for “employment purposes,” which is defined as purposes relating to evaluation of an individual for employment, promotion, reassignment or retention as an employee. The employee claimed that since her retention as an employee was not in question, there was no need to obtain a report. The employer argued that it needed access to employee’s credit reports to investigate theft, fraud, and other dishonesty. It claimed that its ability to investigate allegations would be impaired if the employer had to wait until an investigation was under way before it could request an employee’s authorization to run a credit search. The Court agreed. It also rejected the employee’s contention that, under the FCRA, the employer could not obtain credit reports based on blank, one-time authorization forms. The Court found that the statute requires authorization to be obtained “at any time before the report is procured.” The phrase “any time” is unambiguous and permits an employer to obtain the authorization well in advance of the time it may need to run the report. The Court also rejected the employee’s claim that completion of the authorization must be voluntary and cannot be compelled as a condition of continued employment, finding nothing in the statute to prohibit an employee at-will from being required to submit a signed credit authorization as a condition of employment.


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