AutoZone Hit With Background Screening Class Action
October 2, 2014
Memphis-based AutoZone Inc. (NYSE: AZO) is the latest company to be reluctantly inducted into the FCRA class action club. The company was hit with a suit for alleged violations of state and federal law in its background screening process. The case, Aceves et al. v. AutoZone Inc, filed on September 30, 2014 in the Central District of California, claims that the retailer violated the Fair Credit Reporting Act (FCRA), California’s Consumer Credit Reporting Agencies Act (CCRAA) and the Investigative Consumer Reporting Agency Act (ICRAA).
If you read this blog regularly, this case may sound familiar. AutoZone joins Whole Foods, Home Depot, Disney, Domino’s Pizza, and the growing list of other companies hit with class action suits for alleged FCRA violations. This time, the failure to get proper authorization and make proper disclosures is the problem.
Consent: Authorization and Disclosure Form
The plaintiffs allege that AutoZone failed to make a “clear and conspicuous disclosure” to job applicants in a “stand-alone document consisting solely of the disclosure”—all of which is required by FCRA section 1681b(b)(2)(A) and the corresponding California laws.
The suit claims that the authorization and disclosure is “buried” in a form on the web application that, among other things, covers overtime, shifts and work schedules, submission for drug testing, employment terms and rules, and a release of liability.
The complaint includes various printed screens from the AutoZone website including a section titled “Terms and Agreements” that addresses all sorts of legal terms and conditions of employment. The “Notice Disclosure Regarding Background Investigation” appears as one of 4 different titled sections on the form, with a single checkbox at the bottom to indicate consent to all of the terms. If the plaintiffs allegations are true, and there was no other separate disclosure specifically for the background check, AutoZone could have a problem.
Employers, let’s break it down. The background check authorization and disclosure form needs to stand alone. It needs to be clear and conspicuous. No distracting language. No release of liability. No excuses. While web-based forms should actually make compliance with this requirement easier, employers still seem to be behind the curve. Hopefully the visibility of these suits will help raise awareness and turn the trend around.
Raising the Stakes with “Willfulness”
The complaint not only alleges that AutoZone’s conduct violated the law, but that its conduct was willful. And if they’re successful, that means that the plaintiffs could be entitled to statutory damages, penalties, attorney’s fees on top of the actual damages suffered by the named plaintiffs. FCRA statutory damages range from $100 to $1,000 per violation. For a large, publicly traded company like AutoZone, that adds up to millions.
The plaintiff’s argument for willfulness breaks down like this:
- Defendant is a large company
- Defendant has access to legal advice through its own general counsel’s office and outside employment counsel;
- Defendant included a purported authorization to perform background checks in its employment application which, although defective, shows that the Defendant was aware of the governing laws;
- The plain language of the statute unambiguously indicates that inclusion of a liability release in a disclosure form violates the disclosure and authorization requirements; and
- The FTC’s express statements, which clearly provide that it is a violation of Section 1681b(b)(2)(A) of the FCRA to include a liability waiver in the FCRA disclosure form, predate Defendant’s violative conduct.
If this sounds like you, today may be a good day to review your company’s authorization and disclosure forms—both online and on paper.
The Bottom Line for Employers
FCRA class actions are a scary trend for employers. Fortunately, however, compliance with the technical requirements of the FCRA like authorization and disclosure are not that difficult to fix. Don’t be the next employer called into court. Call your counsel or your screening provider’s compliance department for a check-up. For more tips, take a look at my post: Avoid a Lawsuit–5 Things Employers Should Know about the FCRA.
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