Latest Class Action - Canon Solutions America Inc.

Canon Solutions America Inc. is the latest company to come under compliance fire for an alleged failure to follow FCRA guidelines. Anya McPherson, the individual responsible for the class action, claims that Canon Solutions America fired her without offering her a chance to dispute the results of a background check. McPherson also claims that the charge was more than a decade old and that the conviction was expunged. To make matters more complicated for Canon, the plaintiff also stated that she did not receive a copy of her report, and did not receive a summary of her rights under the FCRA.

Due to the high frequency of cases being brought against employers for FCRA violations, I decided to include a ‘refresher’ for FCRA compliance. 

Please be sure to take into consideration the following:

1) Before Obtaining A Consumer Report

If you intend to use a consumer report for employment purposes, you must provide written disclosure of your intent to perform a background check as a condition of employment. You must also get permission from the applicant. This comes in the form of a written consent form. Once you have obtained consent from the applicant, you can move forward with the background check. The Disclosure and Consent should be kept as separate clearly defined documents or ‘pages’ if you will.

2) Pre-Adverse Action

Adverse Action basically means that you may or intend to deny the applicant employment based on the information you obtained from the background check. If based on your review of the background you plan to pass on the applicant based on this info, you must send the applicant a pre-adverse action letter. 

The Pre-Adverse Action letter must include the following re notification:

• The name, address, and phone number of the Credit Reporting Agency (CRA)

• The fact that the CRA didn't make the adverse decision and cannot give reasons for the decision

• His/her right to a free copy of the consumer report within 60 days

• His/her right to contact the CRA to dispute the accuracy of the report

• Summary of Rights including any State specific requirements

3) Adverse Action

After you have given the applicant 5 days to dispute the report, you may take Adverse Action against the applicant. You must notify them of your final decision to deny employment based upon their consumer report, through use of an Adverse Action Letter, which also must contain all of the above notification provisions mentioned above under pre adverse.

The FTC and EEOC also co-published guidance on the proper procedure for background screening, which can be found here.