Professional in Human Resources (PHR) Practice Exam

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Who does the Fair Credit Reporting Act directly protect?

  1. Employers from background checks

  2. Employees’ privacy regarding background information

  3. Third-party vendors conducting investigations

  4. Job offers for applicants

The correct answer is: Employees’ privacy regarding background information

The Fair Credit Reporting Act (FCRA) primarily protects employees' privacy regarding background information. It establishes guidelines that ensure individuals are informed when consumer reporting agencies are utilized to gather information about them, particularly in employment decisions. This protection includes giving employees the right to be notified if a report is being requested and the right to dispute any inaccuracies in the report. Furthermore, the FCRA mandates that employers must obtain consent from employees or applicants before obtaining a consumer report, which fortifies the privacy rights of individuals in the hiring process. This focus on privacy is essential, as it balances the need for employers to conduct background checks with the rights of individuals to have their personal information handled fairly and responsibly. The other options do not directly align with the core purpose of the FCRA; for instance, the Act does not protect employers from background checks or ensure job offers for applicants. The involvement of third-party vendors is more about regulating their conduct than directly protecting them.