The Sharks are Circling: Two New FCRA Class Actions

Angela Preston

Compliance Employment Background Checks

Just when you thought it was safe to get back in the water, the sharks are circling with more FCRA-related class action claims. This time Home Depot and Aaron’s furniture stores are the companies under attack. Just a couple weeks ago, when most Americans were cutting out of work early to get to their July 4th parties, these two retailers were hit with class action lawsuits alleging violations of the Fair Credit Reporting Act (FCRA) in their background screening process.

This is a continuation of the wave of FCRA class action lawsuits that I have written about all too often in the past year. Investing in some preventive FCRA compliance measures this summer can really pay off, especially since the litigation continues—and recent settlements are costing employers millions of dollars.

Antoine v. Aaron’s Inc.

The named plaintiff in this case, Daniel Antoine, filed this class-action-complaint in the Northern District of Georgia. He claims that Aaron’s failed to provide pre-adverse action notices required under the FCRA to job applicants and employees—including a copy of the background report—before taking adverse action. The complaint also alleges that Aaron’s did not provide applicants with a copy of the Summary of Rights, a notice that is required to be sent to applicants along with the pre-adverse action notice. The case claims willful violations of the Act, which, if upheld, could result in statutory damages up to $1,000 per applicant, as well as punitive damages and attorney’s fees.

Interestingly, the complaint points out that Aaron’s background screening provider offers a service that includes sending the pre-adverse action and adverse action notices to job applicants on behalf of the client. The plaintiff claims that Aaron’s made “the conscious decision to forego” having the background screening company send the notices. This tactic, which we have seen in other complaints, could be used by the plaintiffs to prove “willful” violations.

CVS Caremark Corp. is currently defending a similar claim that it did not provide applicants with a copy of the background check report or the written copy of the Summary of Rights. In yet another recently filed case, Disney is defending a class action where the plaintiff alleges that Disney did not provide him with a copy of the background report, did not issue a pre-adverse action notice, and never sent the applicant written notice of adverse action. Kmart paid out $3 million to settle a class action surrounding its adverse action process.

The Key Takeaways for Adverse Action:

  • Send a pre-adverse notice.
  • Attach a copy of the background check to the pre-adverse action notice.
  • Attach the “Summary of Rights” to the notice.
  • Wait (at least five business days) before making a final decision.
  • Send a second adverse action notice AFTER making the decision not to hire.
  • Remember that adverse action may be outsourced to your screening firm.

Henderson v. The Home Depot

The Northern District of Georgia is also the chosen venue for Henderson-v.-Home Depot. The named plaintiff makes similar accusations regarding willful adverse action violations, but also includes a claim that Home Depot failed to provide proper disclosures to applicants and employees.

The complaint alleges that Home Depot failed to provide a stand-alone disclosure to the applicant as required by the FCRA.  The plaintiff claims that the company’s online “applicant confirmation” violates the FCRA provision that employers provide applicants and employees with a “clear and conspicuous disclosure…in a document that consists solely of the disclosure.”

Whole Foods is fighting a similar class action claim based on the authorization and disclosure form on its web based job application. I blogged on the details of that case here. Last year, Domino’s Pizza paid out a $2.5 million settlement in a class action case that was based in large part on the legality of Domino’s “Background Investigation and Consent Form.” The Plaintiffs in Singleton v. Domino’s Pizza LLC claimed that Domino’s buried the disclosures on the fifth page of a multi-page job application and inserted a liability release and other extraneous information into the authorization.

Dos and Don’ts for Authorizations and Disclosures:

  • DO NOT add waivers or disclaimers of liability to disclosures or authorization forms for a background check.
  • DO make sure that the disclosure stands alone and is not combined with the job application or other extraneous information.
  • DO set out what type of background check is being conducted, who is conducting the check, and how to contact them.
  • DO make sure that valid signatures–including e-signatures–are obtained before moving forward with the background check.

Follow these guidelines, and get back in the water! Learn more about EmployeeScreenIQ’s compliance services here.

I hope your summer is litigation-free and full of fun!

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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.
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