(Security Magazine, September, 2001)

Who Will Do The Internal Investigation of Workplace Crime?

There are a number of good reasons to bring in an outside investigator to handle your internal investigations.  Among them is the impartiality such a action connotes, especially to the victims of sexual harassment and also the level of professionalism that an experienced investigator brings with him as it relates to understanding the legalities involved and the years of interviewing and fact-finding a professional usually has.

Regrettably, there is also a really bad reason that exists right now, and that is the Fair Credit Reporting Act of 1997.  Last year, the legal staff of the Federal Trade Commission made an interpretation of the FCRA that seriously impeded the use an outside investigator.  A contracted investigator is considered to be a Consumer Reporting Agency under the definitions of the FCRA and as such obligates the employer and/or the investigator to obtain the permission of the target (employee?) of the investigation before commencing.  Further, the FCRA also requires that the employee that is being investigated be given a copy of this "Investigative" consumer report if he/she asks to see it in a reasonable period of  time.  The report, of course, will contain the details of the case and quite probably the names and statements of fellow employees who gave witness in this matter.

Specifically, the FCRA defines a "consumer report" as meaning "any...communication of any information by a consumer reporting agency bearing on a consumer's...character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for...employment purposes...". (Section 603(d) of the Act, 15 U.S.C. 1681a(d).)  A "consumer reporting agency" ("CRA") is defined by the Act to include any person which, for monetary fees, "assembles or evaluates" credit information or other information on consumers for the purpose of regularly furnishing consumer reports to third parties using any means or facility of interstate commerce. (Section 603(f) of the FCRA, 15 U.S.C. 1681a(f).) 

When a contracted investigator asks a question concerning an employee's character or mode of living, his report is then considered to be an investigative consumer report. The FCRA has defined an "investigative consumer report" as a consumer report "in which information on a consumer's character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer reported on or with others with whom he is acquainted or who may have knowledge concerning any such items of information." The definition of an "investigative consumer report" has remained unchanged since the enactment of the FCRA in 1970. (Section 603(f) of the FCRA, 15 U.S.C. 1681a(f).)

Section 606 of the FCRA provides that a person may not procure an investigative consumer report on a consumer unless, within three days of first requesting the report, the user discloses to the consumer that "an investigative consumer report including information as to his character, general reputation, personal characteristics and mode of living, whichever are applicable, may be made" and informs the consumer of his right to request additional disclosures of the "nature and scope" of the investigation requested. (15 U.S.C. 1681d(a) and (b).)

Assuming that the subject of the investigation is going to be disciplined at the least, even further obligations are imposed on the employer.  Any sort of discipline, including termination, can certainly be defined as "Adverse Action" and those key words mean that the subject must be told that there will be adverse action (there is also an obligation called "Pre-Adverse Action") and when the discipline occurs, the subject then is to receive the notice of the actual adverse action. "Adverse action" is defined in the FCRA to include "a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee...". (Section 603(k)(1)(B)(ii), 15 U.S.C. 1681a(k)(1)(B)(ii).)

Representatives Pete Sessions, R-TX, and Sheila Jackson Lee, D-TX, have introduced new legislation   with the full backing of the investigative industry which has had their own representatives testify before congressional committees and conducted numerous letter writing campaigns, which will exempt investigation reports of employee misconduct or employer rules violations from the Fair Credit Reporting Act.   The FTC has reached agreement with many of these organizations that the existing conditions that have been imposed by their interpretation of the FCRA must be changed.

In a letter of response to Representative Sessions, written last year, an FTC staffer said "..the Commission agrees that prudent amendments to the FCRA are desirable to remove specifically those FCRA procedural requirements that constitute potential impediments to workplace investigations conducted for employers by outside entities. The Commission believes, however, that other provisions of the FCRA, as they apply to workplace investigations by third parties, provide important rights for individuals who are accused of improprieties without hindering the ability of employers to utilize outside entities to conduct such investigations. We believe that amendments to the FCRA should strike a balance between the need to facilitate efficient, timely investigations and the need to retain basic safeguards for targeted employees."


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