| Employers Must Now Shred Employee Records Before Disposing of Them. |
| Rules interpreting one minor provision of the Fair and Accurate Credit Transactions Act of 2003 (“FACTA”) went into effect June 1, 2005 requiring the destruction (i.e., “shredding or burning” or “smashing or wiping”) of all paper or computer disks containing personal information “derived from a consumer report (e.g., a pre-hire credit check or private information that came originally from a credit report) before it is discarded. The law applies even if a business employs a single employee.
If an employer fails to shred and the information eventually gets out an employee may recover his actual damages if his identity is stolen as a result of the employer’s failure to shred. There are also statutory damages of up to $1,000 per employee and similar state and federal fines for each violation.
The impact is likely to be on small to mid-size businesses. “A small businessman who makes a mistake could bear the brunt of a regulation like this,” says James Plummer, policy analyst at Consumer Alert.
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