Background Check Forms Face Increased Scrutiny in Federal Court

Businesses should check their background check consent forms and their pre-adverse action waiting periods, after a recent federal court decision. In Reardon v. Closetmaid Corporation, the district court granted summary judgment in favor of a class of more than 1,800 job applicants. The Court ruled that the employer’s consent and disclosure form was improper because it contained a waiver of liability, even though the inclusion of such waiver language is commonplace. The Court also granted summary judgment to a subclass of job applicants who were properly sent a pre-adverse action notification form, as required under the FCRA, but whose applications were then denied within fewer days than what this Court considered a “reasonable time period.” Because the Court also determined that the employer’s background check procedures were unreasonable, the company faces statutory liability of $100 to $1,000 per applicant, plus punitive damages and attorneys’ fees. Yet, there is no indication that any of the class members suffered any injury whatsoever. As a result, cautious employers should consider removing from their consent and disclosure forms any waiver language, and implementing an internal policy of waiting five business days between sending a pre-adverse action notice and taking any adverse action.

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Post By Barry Nixon (66 Posts)

W. Barry NIxon, SHRM-CMP is the founder of PreemploymentDirectory.com, the publisher of The Background Buzz, The Global Background Screener, The Annual Background Screening Industry Resource Guide and In Search of Excellence in Background Screening: Insights from Accredited Background Screening Firms. He is co-author of Background Investigations: Managing Hiring Risk from an HR and Security Perspective, a recognized background screening expert and serves as an International Ambassador for the National Association for Professional Background Screeners.