The House of Representatives voted overwhelmingly to reauthorize the Fair Credit Reporting Act (FCRA) and to include a provision in bill to remove third-party investigations of alleged employee misconduct from the notice and disclosure requirements of the laws. The Sept.10 vote for the Fair and Accurate Credit Transaction Act (FACT, H.R. 2622) was 392-30.

The bill's change to the notification requirements for third-party investigations follows three years of lobbying efforts by a business coalition led by the Society for Human Resource Management (SHRM). The House-passed bill would amend Title VI of the FCRA to remove obstacles to workplace investigations created in 1999 when the Federal Trade Commission (FTC) issued what is known as the "Vail Opinion Letter," which stated that the notification and disclosure requirements of FCRA applied whenever employers hired third-party organizations to investigate allegations of workplace sexual harassment.

The letter created a furor among attorneys and business owners who argued that the FTC's position severely hampered an employer's ability to conduct impartial workplace investigations. Several federal court decisions added credence to this argument by suggesting that the involvement of outside and unbiased investigators in preferable when employers perform internal investigations of sexual harassment claims.

Business advocacy groups claimed the opinion letter also had an adverse impact on smaller employers that lacked resources to conduct internal investigations and therefore had to depend on third-party investigators.

FTC officials testified at several congressional hearings, arguing against making any changes that would weaken the Vail letter position. Organized labor also lobbied against proposals to amend Title VI.

Officials with the Equal Employment Opportunity Commission (EEOC) agreed with employer groups, saying that the regulation of third-party investigations of employee misconduct fell within their agency's purview. "The House's overwhelming vote to approve FACT is a huge step forward to ensuring that employers can conduct fair and unbiased investigations of alleged employee misconduct," said Sarah Pierce, manager of employment policy with the SHRM department of governmental affairs.

As passed by the House, FACT would still require employers to provide a summary of a third-party investigator's finding to an employee once the investigation concludes.

"This is a much better alternative than the requirement of providing complete notification and disclosure to employees before an investigation even begins," Pierce added.