Lawsuits Continue to Grow Due to Noncompliant Background Screening
January 10, 2020
It is usually best to look forward, and not back at the past. However, as we head into this new year, and new decade, it is worth looking back at 2019 to see how much the number of lawsuits, both individual and class action, have grown in the background screening arena. According to statistics from WebRecon LLC, by the end of October 2019, the year was on track to break the record for the highest number of lawsuits brought by the FCRA. By the end of November, there was an 8.4% increase in lawsuits over the same time period from 2018, for a total of 4,564. In fact, the number has grown each year since 2011.
Employers can easily avoid these lawsuits by knowing, and following, the laws for the areas in which they work. SHRM tells us that publicity regarding these issues is growing, and as the publicity grows, so does the number of lawsuits filed.
This bears repeating again, and again. First and foremost, make sure your Disclosure and Authorization Forms are FCRA compliant. The largest percentage of filings are based on non-compliant forms.
The Disclosure Form must be “in a document that consists solely of the disclosure.” It cannot have any extraneous information added to it; extraneous information includes state disclosures. The forms should never contain disclaimers attempting to limit the liability of the employer.
These companies were not compliant, and it cost them:
Costco paid nearly $2.5 million in a settlement regarding failure to use a stand-alone disclosure.
Omnicare, Inc. settled for approximately $1.3 million because their Authorization and Disclosure Forms contained a waiver of liability.
Frito-Lay, Inc. agreed to pay about $2.4 million for claims that they added additional language in their disclosure form.
Make sure you have the forms completed and signed before requesting a background check on any applicant or employee.
Uber settled a class action suit for $7.5 million. The claim was that Uber obtained the background reports without proper notice and authorization.
Know, and follow, not only the FCRA requirements, but also the requirements of the area in which you work. If you are checking on an out of town candidate, know the requirements for the area in which the candidate lives.
The Barclays Center in New York settled a proposed class action in New York federal court because it failed to follow both FCRA and New York specific requirements.
The total amount is not listed as there is a tiered payout depending on the status of each plaintiff and other costs involved.
Follow the two-step pre-adverse/adverse action process. You must provide the subject the opportunity to dispute the accuracy of any information you may use to rescind the offer.
Shameca S. Robertson, on behalf of herself and all others similarly situated, versus Allied Solutions, LLC is currently in process on appeal. A decision by a district court stating Shemeca did not have standing for her case was reversed and is now in appellate court.
Don’t become a statistic! Start 2020 right by checking your forms and processes to ensure you are in compliance with the FCRA and any other applicable laws and regulations.