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Employment Background Check Lawsuits on the Rise

On Behalf of | Oct 19, 2015 | Consumer Protection

It is becoming more and more common practice for employers to conduct background checks of their current and potential employees.  Background checks are helpful to employers who are looking for more information regarding a potential job applicant and a useful tool to monitor existing employees.  While employers are entitled to perform background checks, they must follow protocol under the Fair Credit Reporting Act (“FCRA”).

Prior to conducting a background check, employers must follow the steps required of them under the statute.  First, an employer must obtain written consent from the employee to conduct a background check.  This written consent that the employer must obtain from the employee must only disclose to the employee that it may use the information obtained in the background check to make employment related decisions. The consent form must “stand alone.”  That is, it must only be a form that obtains consent for a background check and nothing else.  It cannot contain anything else such as a waiver of any rights the consumer may have should the background report cause a loss in employment.

After receiving a background report for an existing or potential employee, there are additional steps required of employers in the event they wish to take adverse action against the employee based on the information contained the report.  If an employer believes it will take adverse action (reject the applicant), it must first provide the employee with a copy of the report it used, provide warning that the employer may take negative action based upon the contents of the report, and provide a copy of the employee’s rights under the FCRA.

After the employer takes adverse action, that is, the employer ultimately decides it will not hire this person, it must then provide the employee with written notice explaining that he or she was denied employment based on  information contained in the report, and it must further provide the employee with the name and address of the reporting company it relied upon.  The employee must be provided with an opportunity to dispute any information contained in the report.

Over this past year, there has been a significant rise in the number of lawsuits filed alleging violations of the FCRA for failure to comply with employment background checks.  Moreover, the Consumer Financial Protection Bureau (“CFPB”), the agency in charge of consumer protection in the financial marketplace, has seen an increase towards class action lawsuits against corporations for failure to comply with the letter of the law.  These suits can mean big damages paid out by large national corporations for not following the rules of the statute.

Following the guidelines of the statute is taken seriously and consumers deserve to have their rights upheld.  If you believe your rights have been violated under the FCRA during an employment background check and you would like to speak with a licensed attorney, contact SmithMarco, P.C. for a completely free case review.