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Employment Class Action

Employment Class Action Lawsuits to Watch in 2017

If you’re a company, large or small, who uses background checks to determine employment eligibility, you’ll want to keep on top of the latest information on current employment class action lawsuits. Typically these suits are brought when employers violate guidelines of the FCRA and/or the EEOC.

The Federal Credit Reporting Act (FCRA) does not just govern credit reporting agencies as may be implied by its name. Proper use of pre-employment background checks, also known as “consumer reports,” also fall into the FCRA’s guidance. These reports delve into a potential employee’s past history and may include an employer ordering a criminal background check, accessing a credit report, education verification and the gathering of other historical data. This information is then evaluated to determine if the person should be hired. In the case of post-employment background checks, this same information can be used to determine if an employee is eligible for promotion or in other cases, termination. If a company violations FCRA guidelines and civil rights, they then open themselves up to civil lawsuits which can be extremely costly.

The Equal Opportunity Commission (EEOC) also gives guidance on employment background check policies in respect to discrimination. EEOC guidelines state “It’s illegal to check the background of applicants and employees when that decision is based on a person’s race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older). For example, asking only people of a certain race about their financial histories or criminal records is evidence of discrimination.” Additionally, every applicant must be treated equally and background checks that are considered too restrictive can be considered a violation of these policies.

Syed v. M-I, LLC

The case of Syed v. M-I, LLC first appeared in 2014 when Sarmad Syed filed a class action lawsuit against M-I, LLC and its background screening company, alleging that both violated FCRA laws during a routine pre-employment background check. According to the suit filed, M-I, LLC included a waiver of liability form with a FCRA background check disclosure and authorization form as part of Syed’s pre-employment process.

Syed was given the disclosure release package which gave M-I, LLC the authorization to run a credit history report. One form in the package stated that the credit history and other information gathered could be used to conclude employment eligibility. These are standard forms and did not violate any FCRA rules. The employer did however, include another form, a liability waver, in with the required forms which released all involved parties “that rely on this release and/or the information obtained with this release and dissemination of information that is false and untrue if obtained by a third party without verification.”  According to FCRA guidelines, which require the disclosure of background checks to be filed individually without any accompanying forms, the adding of the liability form was a violation.

The suit went to a district court which concluded that the violation was not “willful” and granted a motion to dismiss the case. The case then went to the Ninth Circuit Court of Appeals, who on January 20, 2017, reversed the district court’s decision and issued its decision that M-I, LLC deliberately violated FCRA rules when it included the waiver of liability with the disclosure form. The Ninth Circuit concluded that language in FCRA Section 1681b(b)(2)(A) , clearly states that the background check disclosure form must consist “solely of the disclosure.”

This is important for employers to understand and should set off alarms to go back and review pre-employment forms. Inappropriate use of these forms could result in a direct violation of the Fair Credit Reporting Act.

John Riley et al. v. United Parcel Service of America Inc.

A class action suit was proposed against United Parcel Service of America Inc. (UPS) on February 13, 2017 which alleged that the company had violated the Fair Credit Reporting Act. According to the allegations, UPS failed to provide applicants and employees with background check results. Specifically, John Riley stated that UPS revoked its job offer after receiving his background check but failed to disclose the information used to determine the adverse action with him.

FCRA guidelines require employers using background checks to share information found with employees or potential employees when performing an adverse action. This guideline allows the candidate to review the information and discuss its reliability with the employer – giving them the opportunity to respond to and/or dispute the data. If found guilty of the violation, UPS could face statutory and punitive damages as well as attorney costs.

This is a developing case which employers and human resource personnel should closely follow.

Amazon Discrimination Complaint

In January, 2017 eight former Amazon employees filed a class action complaint against online retail giant Amazon. The group consists of Latino and Black former drivers who allege that they were discriminated against based on unfair background check standards. The complaint alleges that a mass termination was done by Amazon primarily to remove minorities. It states that the employees were terminated after months of service based on old and minor infractions.

“Amazon’s decision to fire them had nothing to do with their ability to perform the job, but was based solely on an overly strict background check policy. That is not only poor business practice, it also violates federal and state anti-discrimination laws,” said Oren M. Sellstrom, one of the plaintiff attorneys.

Steve Churchill, another plaintiff attorney, pointed to EEOC guidelines in respect to restrictive background check policies and stated “If an employer’s policy has a disparate impact on workers of color and is not job-related, then that constitutes illegal discrimination.”

The class action complaint was filed with the Massachusetts Commission Against Discrimination (MCAD) and alleges adverse effects in that state as well as across the United States. This is another case that should be on the radar of employers and human resource personnel.

 

Employers and Human Resource personnel should take the time to review their pre- and post-employment guidelines to ensure they are not violation FCRA and EEOC guidelines. Even the smallest mistakes can be costly. The experts at SB Checks  are available to guide you through this process and ensure you are compliant. Call (888) 725-2535 or visit sbchecks.com today.