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Online Application Systems Open a New Front in FCRA Class Actions

Published by on June 24, 2015

Any company that requires job applicants to complete an application and submit to a background investigation as part of the employment process should be familiar with the Fair Credit Reporting Act (“FCRA”). Generally, the Act requires employers to notify applicants that a background investigation will be requested as a prerequisite to employment and further requires […]

Any company that requires job applicants to complete an application and submit to a background investigation as part of the employment process should be familiar with the Fair Credit Reporting Act (“FCRA”).

Generally, the Act requires employers to notify applicants that a background investigation will be requested as a prerequisite to employment and further requires employers to secure the applicant’s written consent before conducting a background check.

Under the Act, the FCRA notification and disclosure must be “clear and conspicuous” and be made “in a document that consists solely of the disclosure.” The goal was to prevent businesses from including background check authorization statements on an application page that included the individual’s employment history and attestation to the accuracy of the records, abrogating the possibility of unknowing or unwilling consent to the background check.

As more companies have moved to an electronic and/or web-based application format, class-action lawsuits based on the above-referenced notification requirements are becoming a favorite target for plaintiffs.

In Goldberg v. Uber Technologies, Inc., et al, the pro se plaintiff challenged the online background check disclosure form used by Raiser, LLC on the grounds that the online form’s use of a separate text box requiring the applicant to scroll through the FCRA disclosure and separately accept the disclosure was not “clear and conspicuous” because the text box only showed the first few lines of the disclosure.

In Groshek v. Time Warner Cable Inc., the plaintiff claimed that Time Warner’s online application violated the FCRA, in part because the background check authorization form was “buried within several other pages of application documents on the online application system.”

Finally, the plaintiff in Burnside v. Michael’s Stores, Inc., claimed that the company’s background notice violated the FCRA because it was “embedded within an online employment application which appears as one long continuous web page.”

As technology has outpaced the language of the statute, the resulting ambiguity has created more opportunities for class action lawsuits. Plaintiffs are interpreting the “consists solely of the disclosure” requirement literally, and arguing that any electronic application packet or online application on a single webpage would violate the FCRA.

Because plaintiffs can collect up to $1,000 in damages for each violation, a class action lawsuit against an employer utilizing a uniform application for all applicants across the country represents an opportunity for big money. While some courts have addressed the FCRA’s notice requirements within the context of online applications, we are still far from a general rule on the issue.

Laconic Lookout:

Until the statute is amended or the judiciary resolves the ambiguity, FCRA lawsuits based on the “clear and conspicuous” and “in a document that consists solely of the disclosure” requirements will continue to be attractive options for eager plaintiff’s attorneys. Employers utilizing online applications should endeavor to separate their background check authorization notices from the rest of their application.

For purely online applications, the authorization should be given its own webpage or link on the main application page.  Alternatively, employers could make the authorization form be a separate document that the applicant is automatically routed to upon completion and submission of the rest of the application. That way, the applicant cannot claim that the authorization is part of or subsumed within the online forms.

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