Ignoring FCRA Background Check Guidelines Can Be Costly
March 21, 2011
We all know that if an employer intends to conduct a background check through a Consumer Reporting Agency (employment screening company), that they must obtain an applicant’s written consent to do so. Further, we know that if an employer decides to take adverse action against a job candidate or employee based on the outcome of a background check, they must provide them with proper adverse action notification. Isn’t that background screening 101?
Evidently, no one told that to a school bus transportation company who has just settled a $5.9 million class action suit for failing to provide the requisite disclosures to applicants before running a background check on them and also failed to follow the required two-step adverse action process when they denied employment based on information revealed on a criminal background check.
Under the Fair Credit Reporting Act (“FCRA”), an employer has a number of detailed requirements with which it must comply both before it can procure a background report (consumer report) about an applicant or employee, and if it intends to take action in whole or in part based on information in a consumer report. See 15 U.S.C. Sec. 1681 et seq. Specifically, an employer must: (i) have a permissible purpose for procuring a report in the first place; (ii) certify to the background screening company that it will comply with applicable law and will not use any information in violation of Equal Employment Opportunity laws or regulations; (iii) provide a written disclosure to the applicant or employee indicating that specific background checks will be conducted by a third party and obtain authorization from that applicant or employee to conduct such checks; and (iv) follow the detailed two-step adverse action requirements (including providing a copy of the report, a Summary of Rights, and a pre-adverse action notification letting a person know he or she could dispute inaccuracies in the report).
The Court in Hunter, et al v. First Transit,, Inc., Case Nos. 09-CV-6178 & 10-CV-7002 (N.D. Ill. Mar. 23, 2011), granted preliminary approval of the settlement for more than 143,000 class members. The Court has scheduled a final fairness hearing for August 1, 2011.
And here’s Pam’s big advice for all employers out there who conduct background checks
It behooves employers to view these cases as an impetus to evaluate their current policies and procedures relating to the use of background checks in employment and seek legal guidance to ensure compliance with the FCRA and similar state laws.