Louisiana Background Check Laws

Louisiana state largely piggybacks on federal law when it comes to regulating background checks. The Fair Credit Reporting Act is a federal law that limits the amount of background information that credit-reporting agencies and other third-party vendors can pass on to third parties.

While some states enact laws that cover the same territory with modifications, the state of Louisiana does not have a state equivalent of the federal Fair Credit Reporting Act. In order to understand federal and state regulation of background checks, it is necessary to understand credit reporting and how it impacts an individual's finances.

A credit bureau or credit reporting agency is a business that gathers the credit information of individuals and sells it to creditors for a fee. They gather this information whenever a consumer applies for loans or credit cards.

Credit bureaus synthesize this information and assign each individual a credit score based on the credit history that they gather. They don't issue the loans themselves, nor do they make approval decisions, but an individual's credit score is a prime predictor of whether they will qualify for a loan or credit and on what terms credit may be offered.

A trio of credit bureaus in the U.S. are the primary reporting agencies: Experian, Equifax and TransUnion. They acquire information about an individual's credit history from creditors, debtors, debt collection agencies, vendors and government offices with public records.

How do they make money? They take on lending institutions as clients or partners, including banks, mortgage lenders and credit card issuers. These institutions use their relationships with the bureaus to obtain credit information they need to decide to whom they will lend money and what rates to charge. The credit bureaus also can and do sell credit reports to individuals who need to evaluate a person's credit worthiness, like a landlord evaluating a potential tenant.

Generally, the three main credit bureaus each calculate a credit score based on a range from 300 to 850, known as a FICO score. The higher a FICO credit score, the better a person's credit. Since they could use different data, the three bureaus may have different credit scores for one individual.

The three scores are synthesized in the VantageScore. However, FICO and VantageScores can weigh individual elements differently so are not always the same. A good FICO score is in the 670 to 719 range, while a good VantageScore is in the 661 to 780 range. The individuals with the best credit scores generally get the best rate.

Given the important role that obtaining credit plays in the finances of an individual or a family, regulation of credit bureaus is essential to guarantee the fairness and accuracy of the personal information on which a credit score is based.

In 1970, Congress enacted the Fair Credit Reporting Act (FCRA), designed to protect consumers from having incorrect, misleading, negligent or fraudulent information included in their credit score reports. This law governs how credit bureaus can collect and share information about consumers and what notice anyone buying a report must give the individual before proceeding.

The FCRA contains many protections that limit what the bureau can do with individual background check information. These are some of the primary protections:

• Prohibits the release of any background check record that contains information related to a person’s medical condition. This is the case if the information is sought for employment, credit or insurance purposes.

• A consumer reporting agency can provide an individual's background report only to someone with a legitimate need to know, like an employer, a creditor, an insurer or a landlord.

• Certain adverse financial information, like adverse judgments or lawsuits, arrest records or tax liens can be included in background check reports only for a term of seven years.
  

• Bankruptcies can figure on the credit report only for 10 years.

• Criminal convictions can stay on background reports forever unless the records are expunged or sealed from public view.

An individual has certain rights under the FCRA. It is important to learn about these rights since they must be affirmatively asserted. Some primary rights include:

• Individuals have the right to refuse or give their written consent, although refusal may terminate a job or rental opportunity. These protections do not apply to anyone applying for a job with a salary over $75,000 or to private persons who are looking into someone's background.

• If an employer decides against hiring a job applicant because of information provided by a credit agency, the company is required by the FCRA to give the person written notice of the decision and the identity of the agency providing the information.

• In the case of an adverse hiring decision, the law gives the individual the right to see their background report.

• Even absent an adverse decision, every individual has the right under the FCRA to obtain a free copy of their credit report from each of the big three reporting agencies.

• An individual has the right to demand that incomplete or inaccurate information in their credit file be corrected by the credit bureau within 30 days.

Individuals are allowed to rely on federal laws, no matter which state they live in, so Louisiana residents get the full protection of the FCRA. Louisiana does not have any state laws expanding or duplicating the protection of the federal law.

State codes do contain a few laws relating to background checks which seem to expand the rights of Louisiana employers to use these checks in the hiring process rather than expand individual privacy protections.

• Louisiana Revised Statutes 23:291: State provides complete civil immunity to private employers for disclosing information from background checks for a current or prospective employee, either with written consent or at the request of the owner or operator of a facility where the employee works or may work.
  

• Louisiana Revised Statutes 40:1203.1 to 40:1203.7: State mandates criminal history and background checks for certain healthcare and safety-related occupations including nursing care.

• Louisiana Revised Statutes

15:587.1 and 15:587.1.1: State mandates criminal history information and background checks for those seeking a job that includes supervisory or disciplinary authority over children.