Not So Fast: Swift Settles FCRA Claim with $4.4M for Background Checks

Angela Preston

Swift Transportation Settlement for Background Checks

It’s finally over. Swift Transportation Corporation has entered into an agreement to pay $4.4 million and settle a long-running and contentious class action lawsuit for alleged Fair Credit Reporting Act (FCRA) violations. The settlement marks the resolution of yet another high dollar case following the growing trend of FCRA class action claims for background check violations. The case, Ellis et al v. Swift Transportation Corporation, was filed on behalf of US job seekers who applied for truck driver positions with Swift from July 23, 2008 and after.

FCRA Claims Abound

Swift is not alone—it’s just the latest large employer to capitulate. K-Mart agreed to pay out $3 million last year to settle an FCRA claim over background checks, specifically for alleged adverse action and notice violations. Domino’s Pizza paid out a cool $2.5 million in a similar case, and US Xpress settled for $2.75 million. Whole Foods and Disney are currently defending class action claims over their background screening policies filed earlier this year.

The Swift Settlement

In Swift’s case, the settlement amount of $4.4 million, which includes attorney’s fees, will be paid out to those applicants who applied to Swift during the claim period and were the subject of background checks. What does that mean in dollars and cents for the job applicants in the class? Not much, unfortunately. Settlement documents indicate that the award to each claimant will be limited to $50, and will be paid out as long as funds are available. In addition to the cash settlement, Swift agreed to update its authorization and disclosure form as well as well as experienced a process to ensure better compliance with the FCRA.

The Claims

Swift denies all allegations and any wrongdoing, and the parties agreed to the settlement only after determining that the risk and cost of continued litigation was too great. Plaintiffs allege that Swift’s authorization to obtain background checks was defective. According to the court documents, Swift did not advise applicants:

1. Prior to its procurement of the consumer report, that they could receive a free copy of the consumer report within 60 days.

2. And that they were able to dispute the accuracy or completeness of any information in the consumer report with the consumer reporting agency.

The plaintiffs upped the ante by alleging that Swift’s violations were willful–that Swift knew or should have known that it was not in compliance with the law. And under the FCRA, willful violations trigger statutory damages up to $1,000 per violation, as well as punitive damages and attorney’s fees. If the plaintiff had prevailed, the damages would have added up pretty quickly.

The complaint also alleged that Swift’s adverse action notice was improper, but the parties agreed to dismiss the adverse action claims as part of the settlement.

Takeaways

There are three things that employers can do to avoid being the next target for an FCRA class action:

1. Review your authorization and disclosure forms (consent forms) for a background check with legal counsel. Make sure that the proper forms are signed before moving forward with a background check.

2. Provide pre-adverse action notice PRIOR to making a final decision not to hire based on the background results. This notice must include a copy of the report and a Summary of Rights under the FCRA.

3. Follow up with a final adverse action notice AFTER a final decision has been made to disqualify an applicant based on a background report.

Most background screening providers can help with this process, providing sample forms and even mailing notices on your behalf.  This trend has legs, so don’t delay!









Angela Preston
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Angela Preston

Vice President of Compliance & General Counsel at EmployeeScreenIQ
Angela Preston has more than 20 years as a licensed attorney and over 10 years in the background screening area. She serves on the Board of Directors of the National Association of Professional Background Screeners (NAPBS), is a member of the NAPBS Background Screening Credentialing Council (BSCC), and is actively involved in the Society for Human Resource Management (SHRM) and ASIS International. Angela is also a member of the Ohio State and Columbus Bar Associations. Angela has direct oversight and management of compliance programs, and will provide guidance in complex legal matters including state and federal legislation, EEO law, client education, adjudication, pre/adverse action process, NAPBS Accreditation and client and vendor contract management.
Angela Preston
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