$5.75 M Settlement for Background Checks & Non-Compliance
Over the last few years the number of employment class actions under the federal Fair Credit Reporting Act (FCRA) have increased dramatically! A substantial number of cases being reported in the media have involved challenges to an employer's compliance with the FCRA's Mandated Adverse Action Process.
Express Services Inc & Express Personnel recently settled a $5.75 million class action lawsuit for allegedly not following the required FCRA Adverse Action Process. (source)
In addition, UPS, Starbucks, Amazon, and Lyft are currently facing allegations for the very same FCRA non-compliance issue! The following article describes the elements of a class action lawsuit followed by the FCRA requirements for the Adverse Action Process.
Class action lawsuits typically seek damages on behalf of all consumers who were treated in the same fashion. Where the action that forms the basis of the lawsuit is alleged to be willful, a class action suit can seek from $100 to $1,000 per member of the class for each violation of the FCRA. In addition, such lawsuits also request attorney's fees and costs and nearly always include claims for punitive damages.
Employers who use the results of a background investigation for their hiring, promoting, suspending, or termination decisions need to understand Adverse Action and its procedures under the Fair Credit Reporting Act. Under the FCRA employers are obligated to follow a two-step adverse action process; pre-adverse action and adverse action. This process provides the applicant or employee the opportunity to review and dispute information on the report, if they so choose. Once the applicant has undergone a background check, if the report that the employer receives from the background screening company has information that may be used to make a negative hiring decision, the pre-adverse action process begins.
BEFORE taking any adverse employment action the employer must provide the applicant or employee with:
- Pre-Adverse Action letter
- A copy of the consumer report (background check) you relied on to make your decision
- A description in writing of the rights of the consumer under the FCRA, and if in California, a copy of CA Civil Code 1786.22
- Provide a reasonable opportunity to dispute the information before rendering the adverse employment decision. Typically, a reasonable amount of time is 5-10 business days.
After a "reasonable amount of time" has passed for the candidate to contact the background screening company to dispute or explain the contents of the report, the employer must notify the applicant/employee of the fact that Adverse Action has been taken based on a consumer report and must include:
- Adverse Action letter containing the name, address, and phone number of the background screening company that furnished the report: a statement that the background screening company did not decide to take the adverse action and is unable to provide the consumer with specific reasons for the action, and notice of the applicant's/employee's rights to obtain another free copy of his or her report from the background screening company within 60 days.
- A copy of the report you relied upon to make your decision.
- A description in writing of the rights of the consumer under the FCRA, and if in California, a copy of CA Civil Code 1786.
Americhek's completed background reports contain both a pre-adverse and adverse action letter, FCRA Summary of Rights, and CA Civil Code 1786.22. Maintaining compliancy is as easy as copying and pasting the letter onto your company's letterhead. Americhek strongly urges you to always contact your employment attorney for legal advice and direction. We understand that legal compliance is part of any background screening program and we will continue to share new and existing legislation that will assist you in maintaining FCRA compliance.
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