Retail giant Walmart faces a class action lawsuit alleging Fair Credit Reporting Act violations by conducting unauthorized background checks. The class could cover as many as 5 million applicants!
In recent months, we have seen a large uptick in FCRA class action lawsuits. If you are subscribed to our mailing list then you may recall the Stanford class action filed in October 2018, the PetCo class settlement in November 2018, and the Delta Airlines proposed settlement earlier this month. We can now add another to the list and this one is, by far, the largest FCRA class action we’ve seen in recent memory.
This month, Walmart suffered a big defeat when a federal district court in California granted certification to a class that may have as many as five million class members.
The Plaintiffs filed a class action, claiming that Walmart’s background checks failed to satisfy the notice requirements of the Fair Credit Reporting Act (FCRA) and state law. The Plaintiffs claim that, when they applied for jobs at Walmart, Walmart performed a background check without proper and legal authorization, and without providing the requisite disclosures. Specifically, Walmart allegedly included extraneous information on disclosure forms and procured consumer reports without informing applicants of their rights.
The now-certified class is defined to include “current, former and prospective applicants for employment in the United States” who applied for a job where the background report was conducted in the five years before the suit was filed.
What's going on here? The FCRA has specific rules employers must follow. A disclosure form, for example, must consist of only the legally required disclosure. Multi-state employers often try to consolidate and standardize their compliance efforts to satisfy the requirements of multiple jurisdictions, but where background checks are concerned, this move can backfire. As these employers recently found, a single problematic background check form can give rise to a costly class action involving thousands of plaintiffs.
This case demonstrates how important it is for organizations to be aware of FCRA requirements and illustrates the costly monetary repercussions that can arise if the law is not followed. In this instance, the plaintiffs are alleging that Walmart’s disclosure and authorization form contained extraneous material that violates the FCRA’s requirement for this form to be clear and conspicuous.
FCRA compliance is enforced by the Federal Trade Commission (FTC) and the Bureau of Consumer Financial Protection (BCFP). FCRA background-check regulations apply to all US businesses, public and private, regardless of state, revenue size, or headcount.
Requirements for FCRA disclosure and authorization forms change occasionally, so it’s a good idea for employers to check regularly at ftc.gov to make sure disclosure and authorization information are current, or work with your background check provider to ensure your forms are compliant.
In addition, it’s important to remember that individual states and municipalities may have background-check disclosure and authorization requirements that are even stricter than those required by the FCRA. Consult your legal counsel to ensure full compliance or consider working with an accredited background check provider like OPENonline, which helps employers meet compliance requirements with all local and national regulations.
SelectHire, OPENonline’s full service screening solution can help. Please contact us for more information.
Source: The Walmart Background Check Class Action Lawsuit is Randy Pitre v. Wal-Mart Stores Inc., Case No. 8:17-cv-01281-DOC-DFM, in the U.S. District Court for the Central District of California.
This information is not legal advice, for legal advice please seek legal counsel.