Companies are increasingly faced with class actions for alleged violations of the Fair Credit Reporting Act (FCRA). FCRA claims related to background checks have grown since last year.
Most companies perform background checks on employees as part of the employment application or new hire process.
Lyft was successful in convincing a federal judge to dismiss a FCRA class action and order the Plaintiff to submit his claims to arbitration. When he was hired the Lyft driver had accepted Lyft’s terms of service which included a mandatory arbitration agreement. Lyft used these terms to compel the matter to arbitration.
To avoid FCRA class actions, employers should consider having all applicants sign an arbitration agreement, at least before or at the same time the background disclosure / authorization forms are given to the applicant. Having an arbitration agreement with a class action waiver will go a long ways in defending against a FCRA class action.
