Despite all of the
FCRA-related class action suits taking place, it appears large companies are
not taking an appropriate course of action to ensure they are in compliance. One
has to wonder whether, whether it is simply a lack of attention to detail (That
would be a surprise) or simply HR/Legal/Compliance not staying current. The
latest three companies in question are Panera, LLC, American Multi-Cinema, Inc.
(AMC), and Nine West Holdings. Two of these class action suits involve the same
plaintiff, and all three are from the same Florida law firm. In each of these
cases, the plaintiff applied for employment online. Each of these companies
allegedly failed to provide a valid, compliant consent form before initiating
pre-employment background checks.
An employer’s
obligation before obtaining background information is as follows (from the
co-published FTC/EEOC guide):
·
Tell the applicant or employee you might use the
information for decisions about his or her employment. This notice must be in
writing and in stand-alone format. The notice can’t be in an employment
application. You can include minor additional information in the notice (like a
brief description of the nature of consumer reports), but only if it does not
confuse or detract from the notice.
·
If you are asking a company to provide an
“investigative report” – a report based on personal interviews concerning a
person’s character, general reputation, personal characteristics, and lifestyle
– you must also tell the applicant or employee of his or her right to a
description of the nature and scope of the investigation.
·
Get the applicant’s or employee’s written
permission to do the background check. This can be part of the document you use
to notify the person that you will get the report. If you want the
authorization to allow you to get background reports throughout the person’s
employment, make sure you say so clearly and conspicuously.
You can find the FTC/EEOC guidance as a whole here.
Panera allegedly violated the FCRA by not providing a
consent form specifically for a consumer report. The plaintiff also alleged
that the bakery-café chain included extraneous information that detracted from
the notice. American Multi-Cinema, Inc. (AMC) allegedly did not have a
stand-alone consent form for online application for employment. And finally, Nine
West Holdings allegedly had consent language that was part of a web page that
contained a number of links to Nine West information on the website.
The main takeaways from these alleged violations is:
·
Your consent, AKA disclosure and authorization,
must be a stand-alone (not part of the application) form.
·
The consent form cannot contain extraneous
information
·
The purpose of the consent must be clearly
stated (i.e. employment screening)
The lawsuit demonstrates that violations of the FCRA can
create large potential liability. Potential class members, including
employees and prospective employees, may be entitled to statutory damages of up
to $1,000 for each violation in the case of willful non-compliance. Class
action lawsuits also create exposure for large awards of attorney’s fees and
the potential exposure to punitive damages.
If you have any doubts about your company’s FCRA compliance,
PLEASE act before you wind up on the wrong end of a class-action lawsuit.
