2014 – A Year for FCRA Lawsuits. Expect More FCRA Lawsuits in 2015, so Review Your Employee Screening Forms and Processes
Dec 31, 2014
As 2014 comes to a close, it is clear that the number of class action lawsuits that will undoubtedly be filed in 2015, for violations of the FCRA will continue to rise. The FCRA (Fair Credit Reporting Act) is the federal law that regulates employee background checks. It imposes upon employers very specific disclosure requirements, both initially when an employee applicant authorizes the background check, and subsequently, if an adverse action (e.g., to not hire or to terminate the employee applicant) is taken based upon the results of the "consumer report", i.e., the background check report.
In 2014 there was a plethora a FCRA class action lawsuits that were filed. One of the main reasons that plaintiff attorneys are taking on these cases is that when these attorneys claim a "willful violation" of the FCRA, there is no requirement to prove any damages even occurred. For example, the employee could have been hired at full salary and benefits, but if the required "FCRA employee background check disclosure and authorization form" contained any superfluous language (such as a general release of liability for the employer), these plaintiff attorneys are claiming that the entire form is "facially invalid." If a court were to agree that the "FCRA employee consent form" was facially invalid, the potential penalty is up to $1,000 per occurrence, plus legal fees, etc. This is the reason there have been so many multi-million dollar FCRA lawsuit settlements by companies across the nation in 2014, because when a class is certified it generally looks back 5 years, and bases this penalty on the total number of applicants that applied during that period. When the potential liability for FCRA violations can exceed $100 million, settling for $4.08 million (Dollar General) or $6.8 million (Publix Super Markets), often is the business decision that companies take, even when they claim no liability or wrongdoing.
If your company has not yet reviewed its employee screening processes, forms, and procedures, now is the time to do so. Your company should work with a reputable and reliable background screening company that can help navigate the complex employer-mandated disclosure requirements that the FCRA imposes upon each employer. Remember there is not only the initial required disclosure, but there are subsequent required disclosures, should an adverse action be taken against the employee applicant, based upon the results of the background check report.
Posted by: Rudy Troisi. President, Reliable Background Screening.