Employers failing to strictly comply with FCRA requirements in conducting background checks continue to face expensive consequences. On November 16, 2018, the United States District Court for the Southern District of California approved a $1.2 million settlement of a class action lawsuit alleging violations of the FCRA filed against the popular pet supplies chain Petco.
A magistrate judge in the U.S. District Court for the District of Oregon recently made findings and recommendations to dismiss a purported class action against Kroger subsidiary Fred Meyer. The suit alleges that the retailer’s background check process for prospective employees violates the Fair Credit Reporting Act by both failing to properly disclose that a report will be run, and failing to comply with the statute’s procedural requirements before taking adverse action against an applicant.
On April 23, 2018, the U.S. District Court for the Northern District of Illinois in Ratliff v. Celadon Trucking Servs., 1:17-cv-07163, dismissed a putative class action lawsuit alleging a violation of the pre-adverse action notice requirements in section 1681b(b)(3) of the Fair Credit Reporting Act (“FCRA”). Ratliff is significant in the body of background check precedent because it is a part of an emerging trend of § 1681b(b)(3) claims (as opposed to the more commonly challenged § 1681b(b)(2)Disclosure claims) challenged and dismissed for lack of Article III standing.
In the opinion, Judge Manish S. Shah found plaintiff Ratliff could not show that he suffered an injury-in-fact after defendant Celadon allegedly did not properly provide him with an FCRA mandated notice before declining his employment due to the results of his criminal background check.
On December 21, 2017, the U.S. District Court for the Eastern District of Pennsylvania in Moore v. Rite Aid Headquarters Corp., 2:13-cv-01515, dismissed a class action lawsuit alleging a violation of the pre-adverse action notice requirements in section 1681b(b)(3) of the Fair Credit Reporting Act (“FCRA”). Moore is significant in the body of criminal background check precedent because it is a post-Spokeo ruling dismissing a pre-adverse action notice claim (as opposed to a 1681b(b)(2) Disclosure claim) on standing grounds after the parties participated in discovery and developed a factual record.
Effective March 17, 2017, the District of Columbia will join a dozen other jurisdictions across the country that prohibit an employer’s use of “credit information” in employment decisions. The new law, D.C. Act 21-673, amends the District of Columbia’s existing human rights law by adding credit information as a prohibited basis for discrimination for any employment decision (not just hiring), and applies to employers of any size. See D.C. Code § 2-1402.11(a)(1) and (a)(1)(4)(D), as amended.
Retailer Big Lots Stores, Inc. is facing a putative class action in Philadelphia, wherein the plaintiff alleges that the company “systematically” violated the Fair Credit Reporting Act’s (“FCRA”) “standalone disclosure requirement” by making prospective employees sign a document used as a background check consent form that contained extraneous information. Among other things, the plaintiff alleges that Big Lots’ form violates the FCRA because it includes the following three categories of extraneous information: (1) an “implied liability waiver” (specifically, a statement that the applicant “fully understand[s] that all employment decisions are based on legitimate nondiscriminatory reasons”); (2) state-specific notices; and (3) information on how background information will be gathered and from which sources, statements pertaining to disputing any information, and the name and contact information of the consumer reporting agency.
Discover how the use of criminal background checks in the hiring process is creating an increasing exposure to liability. The Equal Employment Opportunity Commission (EEOC) is aggressively pursuing this issue to ensure the practice does not have a disparate impact on minority applicants. Additionally, plaintiffs’ class action attorneys are pursuing employers nationwide for failing to conform their background check process with the dictates and protections of the federal Fair Credit Reporting Act. This webinar will highlight lessons learned in the trenches, and give insights on how to properly handle the sensitive use of criminal background check information.
While much attention has been paid this year to the EEOC’s agenda and litigation over criminal background checks (the agency asserts such background checks have a disparate impact on minority groups), a parallel challenge kept pace in the form of private class action litigation under the Fair Credit Reporting Act (“FCRA”). 2013 saw a number of significant class action settlements against both employers and consumer reporting agencies (“CRAs”) for alleged violations of the Act in the use of criminal background checks:
Employers’ use of criminal background checks in the hiring process is creating growing exposure to liability on several fronts.
Please join us for a complimentary webinar on this topic:
Thursday, January 16, 2014
10:00 a.m. – 11:00 a.m. PT
(1:00 p.m. – 2:00 p.m. ET)
As reported on Hunton & Williams’ Privacy and Information Security Law Blog, on January 25, 2013, Kmart Corporation (“Kmart”) agreed to a $3 million settlement stemming from allegations that it violated the Fair Credit Reporting Act (“FCRA”) when using background checks to make employment decisions. The FCRA addresses adverse actions taken against consumers based on information in consumer reports and includes numerous requirements relating to the use of such reports in the employment context.