Authored By W.Barry Nixon, SHRM- CMP
Michigan-based company WebRecon recently reported that June court filings for FCRA lawsuits were up 34.5% over May and up 27.6% for the year, to date. Sixteen of the 409 FCRA cases filed in June were Class Actions. Some of the top courts included 102 lawsuits in Chicago, 77 in Los Angeles, 68 in Brooklyn, 61 in Atlanta and 48 in San Jose. States where CFPB complaints were filed included California (412), Florida (329), Texas (309), New York (178) and Georgia (157).
Those who conduct background investigations are aware of the Fair Credit Reporting Act that protects consumers while undergoing background screening. The law aims to ensure accurate reporting and dissemination of consumer report information, such as credit histories and background checks.
But it is important for employers to read the fine print to protect themselves from potential hires like Corey Groshek of Green Bay, who has threatened to sue at least 46 companies, including Time Warner Cable, Lands’ End, Burlington Coat Factory, Goodwill Industries and hhgregg. Roughly 20 of those companies have agreed to settle outside of court, granting Groshek more than $200,000 in settlements from the 562 jobs he has applied to over an 18-month stretch.
Groshek, like many others, has recognized this opportunity to sue over the technicality in the law that states “A person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless a clear and conspicuous disclosure has been made in writing to the consumer … ”
It has been Groshek’s method to get to the point in the hiring process during which the company provides him with the FCRA required disclosure. From here, he alleges violations via a demand letter or the filing of a lawsuit. His demands include millions of dollars lost in trial or a six-figure settlement. When Time Warner didn’t settle with Groshek, all documentation, including demand letters, were submitted to the courts. Fortunately, a Wisconsin federal judge dismissed the class action, stating that the plaintiff was unable to prove any harm had been inflicted upon him as a result of the violation.
Even with one victory, Melissa Sorenson, executive director of the National Association of Professional Background Screeners, said employers should be aware of the potential for these types of law suits in the future. She encourages companies to conduct an audit of the disclosure and release form to ensure that they are compliant with all the laws of the FCRA.