New Jersey Court Approves $870,000 Employment Background Check Settlement
June 2, 2014
If you’ve been paying attention to our blog for the last couple years, you’ll know that we’ve spent a considerable amount of time discussing the flurry of class action lawsuits brought against employers for failure to comply with the Fair Credit Reporting Act (FCRA). And by no means are these cases for the feint of heart. Typically, we’ve seen settlements range from several hundred thousand dollars to tens of millions.
Well, apparently not everyone has gotten the memo, so if you are concerned about maintaining compliant background check practices, you’ll want to read on.
Last week, a New Jersey federal court approved an $870,000 class settlement against a trucking company who didn’t think they needed to obtain consent from their job candidates to conduct an employment background check. Not only didn’t they have consent, but clearly accuracy wasn’t important either; the lead plaintiff wasn’t hired because his criminal background check incorrectly indicated that he was a convicted felon. Now that’s a daily double and a sure-fire way to get sued.
To be fair, I am certain that the trucking company didn’t set out to violate anyone’s rights.
“We were advised that some of the procedures that we were following did not follow the protocol of the Fair Credit Reporting Act,” Thomas Connery, chief operating officer of New England Motor Freight, told TT. “We have since identified and corrected these deficiencies in our processes.”
This is an expensive lesson to learn and one we’d like to review with our readers so that they don’t end up in similar circumstances.
So let’s review the requirements for a compliant background check as it relates to this case:
- The FCRA requires a signed authorization and disclosure from the applicant, sometimes referred to as a “Consent” form. No matter what you call it, the form must consist solely of the required authorization and disclosure—no extraneous information can be attached or included.
- The authorization and disclosure form(s) must be executed and signed by the applicant prior to requesting or conducting a background check.
Here are some helpful tips for employers looking to avoid similar litigation:
- Make sure that you have applicants sign an authorization and disclosure, documenting written consent for the background check. Electronic and paper forms are both o.k.
- Confirm that the form is signed prior to ordering the background check. Provide a mechanism for the applicant to date the form.
- Consult with legal counsel or an expert on what language can be included on the form. While “authorization” and “disclosure” are two separate requirements under the FCRA, it’s o.k. to combine those two requirements on one form.
- Don’t include extraneous information, like a disclaimer, release of liability, or acknowledgments on the form.
- Consider state requirements that may have specific rules for the authorization and disclosure form.
- Bring together the different stakeholders within your organization to make sure you are getting the background screening process right. The HR department, recruiting, procurement, legal counsel, and information technology departments may all have a stake in this process.
Reputable background screening companies should be able to provide you with compliance solutions to help you comply with the FCRA. In the meantime we’ll will be tracking this and other pending FCRA cases.