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Thursday, June 21, 2018

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How to avoid an FCRA lawsuit

How to avoid an FCRA lawsuit

In February, UPS was hit with a class action lawsuit that claims the package delivery company used background checks to make employment decisions without offering screening results to either workers or applicants, an alleged breach of the Fair Credit Reporting Act (FCRA).

Plaintiff John Riley's complaint alleges that he was denied a job as a UPS customer service representative based on a background check from a third-party vendor. UPS did not give Riley feedback about the contents of the report, even though it was used to make an employment decision.

“As a result, Plaintiff was deprived of any opportunity to review the information in the report and discuss it with Defendant before he was terminated from employment, in violation of the FCRA,” the UPS lawsuit states.

Proper disclosure needed

The UPS case, as well as other recent lawsuits and decisions, illuminates the need for employers to take a closer look at their background screening processes.

For instance, the FCRA requires businesses that obtain a background report for employment purposes provide "clear and conspicuous" disclosure stating the report will only be used to determine a candidate's job prospects. Hires must also authorize procurement of the report in writing as part of the application process.

However, both the disclosure and authorization need to be placed on a separate standalone document, a rule that has led to lawsuits against various employers.

In 2015, Whole Foods Market Group Inc. settled for $803,000 in a Florida district court after including a waiver and release of liability on the same form as the background report disclosure. Due to this alleged oversight as claimed by the lawsuit, Whole Foods violated FCRA rules by not properly disclosing that workers were consenting to background checks in their job application forms.

Other points to remember

Along with the substance of the disclosure form, employers should educate themselves on proper presentation of the document itself. Past FCRA claims have alleged the form was erroneously embedded in a longer package of information, even though the package included separate pages and subheadings.

Online applications pose their own difficulties for FCRA compliance, particularly if disclosure language is included on the same page as any additional information. Companies would be wise to review their online applications with their legal counsel to ensure disclosure info appears as the only language visible on the screen.

Setting clear application policy and following it is a strong step for employers wanting to avoid potentially problems during the background check process. 

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