Frito-Lay Pays $2.4 Million to Settle Class Action Lawsuit

Employers who utilize forms that do not comply with the FCRA and best practices continue to find themselves the target of litigation. Over the past several years, one common target by the plaintiff’s bar has been authorization and disclosure forms.

Part of an employer’s obligation when ordering a background check is to obtain informed authorization from a job applicant. When obtaining authorization, the FCRA directs employers to provide a “clear and conspicuous” written disclosure to the applicant concerning the background check, in a form that consists “solely” of the disclosure. In the past employers have attempted to include waivers, various certifications, additional legal jargon, or any overly broad authorizations that permit release of additional information. Adding these extra pieces, according to the Federal Trade Commission (FTC) makes it harder for the prospective employee to understand the main purpose of the document. Courts around the country view this as violating the “clear and conspicuous” provision.

News of a recent court settlement by Frito-Lay is a clear example where there was a failure by an employer to create and use a “clear and conspicuous” disclosure form. In Chism v. PepsiCo, Inc. and Frito-Lay, Inc, the plaintiff argued that including information such as online links to marketing information violated the “clear and conspicuous” standard. Frito-Lay has agreed to pay a settlement of $2.4 million.

Employers can no longer afford to use forms that can place them at risk. A disclosure form should contain the disclosure and nothing more. A periodic review by legal professionals of the forms and procedures used during the hiring process should become the standard for all employers to ensure compliancy with all laws and regulations.

Learn more about how IntelliCorp helps our clients maintain legal compliance.


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