A recent spate of class-action suits should remind employers and HR of the steep cost of FCRA violations. Experts say the time is right for employers to reassess their background-checking processes—and the role staffing and consumer reporting agencies play in those processes.
By Mark McGraw
These days, it seems as if U. S. courtrooms are full of class-action cases involving alleged violations of the Fair Credit Reporting Act.
Consider these recent claims:
In April, Gregory Williams sued online retailer Amazon.com Inc. and staffing firm Staff Management Solutions after being turned down for a warehouse job at Amazon. Williams claims the companies violated FCRA by allegedly failing to provide job candidates with background-check results before making hiring decisions.
According to court documents, Williams—who was rejected on the basis of a felony cocaine possession conviction that turned out to be erroneous—claims Amazon and the staffing agency systematically denied potential employees the results of their background checks before hiring decisions were made, which denies applicants the opportunity to correct any mistakes that may be contained in the record.
The suit seeks class-action certification to include all individuals rejected for positions at Amazon over the past five years who did not receive copies of background checks done by any consumer reporting agencies used by Amazon in that five-year span.
A $3 million settlement was recently reached in Jeneen Brown v. Delhaize America, LLC et al., in which the plaintiffs claimed Food Lion and its parent company Delhaize America violated the FCRA requirement for “a clear and conspicuous disclosure” or “stand-alone disclosure” when a background-check report is obtained for employment purposes.
In March, plaintiff Colin Speer filed a motion in a federal Florida court, seeking class certification for another lawsuit involving a grocery chain. In the suit, Speer, a former Whole Foods employee, alleges the company’s disclosure that it may procure a consumer report for employment purposes wasn’t included as a stand-alone document when he applied for a job and completed an online background-information form.
Speer also claims the company required him to authorize the procurement of the report on another page, and asserts that the forms—while both are single-page documents—don’t comply with the law because they must be read and analyzed together.
And, there are numbers suggesting such class-action suits centered around claims of FCRA violations are on the upswing—and are likely to keep increasing.
or example, labor law firm Littler’s recent report, The Swelling Tide of Fair Credit Reporting Act (FCRA) Class Actions: Practical Risk-Mitigating Measures for Employers, found at least 27 nationwide FCRA class actions were filed against employers as of August 2014. That number, according to Littler, roughly tripled from the year before.
There may be a few factors driving this spike, says Veena Iyer, a labor and employment attorney in the Minneapolis office of Nilan Johnson Lewis.
With respect to FCRA, the statute “has a lot of technical requirements,” says Iyer. “This means there are lots of technical ways to violate the statute, and there a lot of plaintiffs’ attorneys who recognize that.”
Some of the most common complaints, the report noted, include claims that employers’ background check disclosure forms contained language not limited to the disclosure required by the statute, the employer failed to provide a pre-adverse action notice, and the employer did not wait the right amount of time before taking final adverse action against an individual.
With respect to potential FCRA violations, where many organizations trip up—as evidenced in the aforementioned cases and the Littler report—is in how they handle adverse action notices.
Nevertheless, this part of the FCRA compliance process doesn’t have to be especially difficult to understand or carry out, says Doug Kauffman, a Birmingham, Ala.-based partner in Balch & Bingham’s labor and employment group.
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