Insights

Home > News & Insights > Insights > Class Action Highlights FCRA Compliance Issues

Share this on:   a b j c

Class Action Highlights FCRA Compliance Issues

Published by on December 11, 2014

The Eastern District of Virginia recently certified two related classes in a case involving alleged violations of the Fair Credit Reporting Act (“FCRA”).  The claims were raised by former applicants alleging that the defendant company violated both the notice and authorization provisions of the FCRA and failed to provide copies of the applicants’ background reports […]

The Eastern District of Virginia recently certified two related classes in a case involving alleged violations of the Fair Credit Reporting Act (“FCRA”).  The claims were raised by former applicants alleging that the defendant company violated both the notice and authorization provisions of the FCRA and failed to provide copies of the applicants’ background reports and summaries of their rights prior to rejecting their applications.

The company used a standardized form notifying applicants that a background check may be conducted and requested the applicant’s authorization.  The form also included a liability waiver.  Additionally, rejected applicants were not provided a copy of their background reports or a summary of their rights before adverse action was taken, only after their applications had been denied or their conditional employment was terminated.  The plaintiff brought the case on behalf of all applicants who had used the standard form and had been rejected by the defendant employer within the previous two years.

The Eastern District certified two classes in the case, together totaling more than 1,700 individuals.  Given the standardized nature of the defendant’s application process, the forms used and the manner in which background reports were procured and utilized, the court easily found commonality between the applicants.  If the representative plaintiff had not been provided the background report prior to adverse action, the other class members likely had not either.

Laconic Lookout: FCRA claims are becoming much more common given the act’s complicated requirements and obligations placed on employers, as well as the potential for numerous violations in a standardized application process.  Standardized application systems containing FCRA violations create great potential for class action claims similar to the above-described case.  Employers should be careful to review their application process to ensure FCRA compliance.  In addition, the FCRA places obligations specifically on the employer.  Employers should also be careful not to delegate all aspects of the background check and application review process to the company producing the background report unless you can get an ironclad indemnification clause!

Topics: , , , ,

Share:   a b j c