Another Class Action Lawsuit Over Background Check Authorization Forms Reaches Settlement

In recent years attorneys have successfully targeted language in the Fair Credit Reporting Act (FCRA) to use as sources of litigation. One common target includes forms used by organizations to gain authorization from an individual to obtain a background check report. To obtain authorization the FCRA directs organizations to make a “clear and conspicuous” written disclosure to the applicant about the background check, in a document that consists “solely” of the disclosure. Many organizations have found out that a technical violation of the FCRA, even made in good faith, is still a violation and subject to penalties.

An example of this scenario is a case heading toward settlement (Ijeoma Esomonu v. Omnicare Inc.) where Omnicare was accused of using an authorization form that was “embedded with extraneous information” instead of in a stand-alone document as required by the FCRA. The plaintiff alleged that use of the form constituted a violation of the FCRA and violated California’s Consumer Credit Reporting Agencies Act and California’s Investigative Consumer Reporting Agencies Act. The California federal judge has preliminary approved a proposed $1.3 million class action settlement.

Examples of what may constitute “extraneous information” on a disclosure form include:

  • Language that claims to release a company from liability for conducting, obtaining, or using the background screening report
  • A certification by the prospective employee that all information in application is accurate
  • Overly broad authorizations that permit release of information that the FCRA doesn’t allow to be included in report
  • Wording that purports to require the prospective employee to acknowledge that a company’s hiring decisions are based on legitimate non-discriminatory reasons

It is true in the past few years federal courts have slowly begun shifting the onus to plaintiffs to provide evidence of “concrete injury” when alleging these FCRA violations. Cases such as Spokeo, Inc. , v. Robins  and Groshek v. Time Warner Cable, Inc. have provided precedent that technical violations without alleged injury does not rise to the level necessary to successfully litigate a class action lawsuit.

However, it is still recommended that organizations utilize a literal interpretation of the FCRA when creating their forms. Despite the fact recent legal precedence in the federal courts may be shifting to their benefit, it is simply not worth the chance of litigation to not take that precaution. Consulting a legal professional is always recommended if you have questions about the legal compliance of your hiring process.

Read more on this case at Top Class Actions.

Read the Fair Credit Reporting Act

Visit the IntelliCorp Compliance page to gain a better understanding of how we view the importance of maintaining a legally compliant screening program.

Go to our Resources page to access a repository of information meant to provide the tools necessary to manage a background screening program that provides real value. It contains links to:

  • Blog center
  • Forms
  • Legislative guides
  • Videos
  • Whitepapers
  • Training schedule
  • FAQ



Blog post currently doesn't have any comments.

Add Your Comment