Authored By W.Barry Nixon, SHRM- CMP
Due to the recent surge in class action lawsuits against employers who allegedly violated the Fair Credit Reporting Act, background screening has been under attack. But, in all truth, many of these mistakes could have been avoided had the employer followed the very clear guidance provided by the FCRA.
Even so, the trend has continued to rise since 2014, with a number of class action lawsuits being filed. We have compiled a list of some, in an effort to provide a “what not to do” when it comes to the very important background screening process.
In Graham v. Michaels Stores Inc., Case No. 2:14-cv-07563, U.S. District Court for the District of New Jersey Dec. 4, 2014, the plaintiff alleges that the company did not provide a stand-alone disclosure, however, the complaint states that the document was part of the application form.
In Peikoff v. Paramount Pictures Corporation, Case No. 3:15-cv-00068, in the U.S. District Court for the Northern District of California, January 7, 2015, Peikoff states that the company violated the requirement to include a disclosure in a document that “consists solely of the disclosure,” while the complaint alleges the form includes a release from liability.
In Doe v. Express Services, Inc.; Express Employment Prof.; and Palisade Services, Inc. CASE NO. 3:15-cv-00232, U.S. District Court, Northern Dist. CA, January 15, 2015, the plaintiff alleges that the company did not disclose the name and contact information of the screening company or provide a check box to indicate that the applicant would like to request a copy of the consumer report. This is in violation of the FCRA and California’s Investigative Consumer Reporting Agencies Act.
Other examples include a case in which the plaintiff alleged the Candidate Release Authorization form released the employer and screening companies from liability involving the background check and a case in which the complaint said the online onboarding form provided similar information.
And in one more case, a nursing home chain was sued after rescinding a job offer for an applicant after completing a background check, but failing to provide a copy and statement of her rights. A child abuse conviction from 1977 also was not examined to determine the employee’s level of involvement in the felony charge.
Many of the cases could have been avoided by following some simple FCRA rules, including notifying applicants about the background check as part of the employment process and provision of a Statement of Rights and results of the screening before action is taken.
It is recommended that employers re-evaluate background screening policies, procedures and practices, both internally and externally, in order to ensure compliance with the FCRA regulations. Be sure to share some of the costs incurred from FCRA class action lawsuits, such as K-Mart ($3 million), Domino’s Pizza ($2.5 million) and Swift Transportation ($4.4 million).