On the heels of Amazon's $5 million settlement for background check violations, which we covered in this blog post, FCRA class action lawsuits continue to be on the rise.  

Two recent court decisions highlight the importance of strictly following each of the FCRA's technical requirements relating to background investigations:  

  • In Robertson v. Allied Solutions, LLC, the Seventh Circuit Court of Appeals (covering Indiana, Illinois, and Wisconsin) allowed a class action lawsuit to proceed where an employer rescinded job offers without providing:
    • The Pre-Adverse Action Notice (explaining negative information contained within the background report may result in an adverse employment action; and providing the candidate with a reasonable time period to dispute);
    • "A Summary of Your Rights Under the Fair Credit Reporting Act" (as we covered in this recent blog post on the FCRA "Summary of Your Rights," a new version just went into effect on September 21, 2018); and
    • A complete copy of the applicant's background check report. 

The employer (Allied Solutions) argued the class plaintiffs could not win because the criminal history information contained within the reports was accurate; i.e., even if Allied Solutions had followed the hyper-technical FCRA requirements, the result (denial of hire) would have been the same. The Seventh Circuit disagreed, ruling the class action could proceed because "an employer's disclosure obligations under [the FCRA] exist to serve interests beyond the problem of inaccurate reports."  

  • In Long v. Southeastern Pennsylvania Transportation Authority, the Third Circuit Court of Appeals (covering Delaware, New Jersey, and Pennsylvania) considered the same question (also brought as a class action) and arrived at the same conclusion.  "The meaning of [the FCRA] is plain: before an employer takes adverse action based in any part on a consumer report, the consumer has a right to receive a description of his rights under the FCRA, as well as a copy of his report, regardless of its accuracy," said the Third Circuit.  

Employer Take Away - ensure that your company's background check and credit check processes, including all relevant and updated forms, comply with the FCRA's hyper-technical requirements. Jumping the gun by notifying a candidate he or she is "ineligible" prior to completing the Pre-Adverse and Adverse Action Process exposes your company to legal liability.

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