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Wednesday, September 23, 2020

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Frito-Lay settles FCRA background check notification suit

Frito-Lay settles FCRA background check notification suit

Frito-Lay Inc. has agreed to pay a $2.4 million settlement in a class action lawsuit that claims the company took adverse action against job applicants and employees by using consumer reports for background checks without providing the requisite notice under the law.

According to the lawsuit, Frito-Lay - a subsidiary of PepsiCo -  violated the federal Fair Credit Reporting Act (FCRA), the Investigative Consumer Reporting Agencies Act (ICRAA) and the California Consumer Credit Reporting Agencies Act (CCRAA) in failing to supply proper disclosure forms for its employment screenings.

Originally filed in January 2017, the suit claims that the snack food manufacturer routinely acquired investigative consumer reports when conducting background checks of job applicants and current employees. Per FCRA regulations, Frito-Lay should have provided candidates and employees with a stand-alone disclosure form.

But the plaintiff said that instead of adhering to FCRA-mandated rules, the company included the disclosure in a general document containing extraneous information. As stated in the suit, this document contained the disclosure as well as an assurance that the plaintiff's responses to the requested information was correct.

Allegedly, the document contained the line, “I have been given a stand-alone, consumer notification that a report will be requested and used for the purpose of evaluating me for employment or retention as an employee.” However, the plaintiff said this statement was false, and improperly included in the general document.

In addition, the suit argued that the statement did not properly provide applicants and employees with a true disclosure of the company's use of consumer reports in employment checks. According to the plaintiff, the current statement “is intended to have the same end result as a liability release; Frito-Lay will escape liability because of a document signed by the applicant.”

The FCRA prohibits employers from running background checks for employment purposes without providing a “clear and conspicuous disclosure… in a document that consists solely of the disclosure," according to FCRA section 1681b.

Further, a plaintiff may be entitled to damages if a defendant willfully violates the FCRA: "Any person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer in an amount equal to the sum of… damages of not less than $100 and not more than $1,000."

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