Auto Parts Retailer Reaches Settlement in Class Action Over Background Check Authorization

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Auto Parts Retailer Reaches Settlement in Class Action Over Background Check Authorization
March 3, 2023

A major auto parts company has agreed to a settlement in a class action lawsuit. In this suit, the company resolved claims about not obtaining valid authorization to conduct background checks on job applicants. As a result, it will pay $950,000.

The settlement will benefit both current and former employees of the auto parts company. It will affect those who signed job application disclosure, authorization, and digital signature forms. In addition, it includes anyone that the company obtained a consumer report between January 31, 2015, and February 17, 2021.

The plaintiffs claimed the defendant violated their rights under the Fair Credit Reporting Act (FCRA). According to the claim, this violation happened while obtaining consent to conduct a background check during the application process. In addition, they alleged that the auto parts company included extraneous information on disclosure forms, violating the FCRA.

The FCRA requires employers to “provide the prospective employee with a clear and conspicuous written disclosure that you plan to get a background screening report about them.” Employers must also obtain the person’s written authorization to conduct the background check. However, employers may combine the disclosure with the request for permission on one document. In addition, it must have clear language that potential employees will be able to understand. Some companies end up having problems due to adding complicated legal wording, waivers, or acknowledgments.

The auto parts company has not admitted wrongdoing despite agreeing to the settlement. The terms state that class members can get an equal share. After paying the attorney’s fees and other costs, the net settlement should become approximately $495,000. Therefore, each class member can receive $2.92 based on the projected class size and the expected net settlement fund. However, the exact payments could be higher or lower than this estimate.

The deadline for exclusion and objection is March 5, 2023; final approval for the hearing is the day after, March 6, 2023. Class members who choose not to exclude themselves from the settlement can expect an automatic payment. In addition, they do not need a class form to benefit from the suit.

This case shows the importance of following regulations when conducting background checks. Businesses can ensure compliance by partnering with a trustworthy background check company. The right partner will provide accurate and FCRA-compliant reports.

Looking to easily verify your employment qualifications? Talk to a sales representative today about switching to pre-employment background checks.