February 21, 2023

It’s not uncommon for California employers to face lawsuits from current or past employees for violating wage and hour regulations. However, the number of legal actions taken against employers for supposed violations of state and federal background check laws has been increasing. Despite this trend, a recent decision by the California Court of Appeals could relieve some of the pressure on employers.

In this case, a former employee of a convenience store chain filed a class action lawsuit claiming that the chain’s background check forms were flawed, in violation of the Fair Credit Reporting Act (FCRA). The federal court dismissed the claim for lack of standing, as the plaintiff did not show any actual harm or injury resulting from the supposed technical violations of the FCRA.

The plaintiff then re-filed the suit in state court but was dismissed for similar reasons. The state appellate court held that an informational injury that does not cause an adverse effect is insufficient to allow a private litigant to sue under California law. The court reasoned that holding the convenience store liable for a violation that did not cause an injury would not align with the privacy goals of the FCRA. The California Supreme Court denied the plaintiff’s petition for a review of the decision and his request to depublish it on January 25th, resulting in another notable victory for employers.

The ruling could serve as a valuable defense for California employers in defending against similar claims, particularly those brought as class actions on behalf of all individuals who underwent the company’s background screening process, regardless of whether they were hired or not. The penalties sought in these cases can range from $100 to $1,000 for each individual. To avoid facing such claims, it’s crucial to have your background check disclosure and authorization forms reviewed by legal counsel to ensure compliance. In California, compliance with the state’s Fair Chance Act and relevant local ordinances, which regulate inquiries into job applicants’ criminal history, is also necessary.

In addition, it’s worth noting that background check laws vary widely from state to state, and many states have additional requirements beyond those mandated by the FCRA. As a result, multistate employers should carefully review the regulations in the locations where their employees are based and work with their workplace law counsel to ensure that they have appropriate measures in place to comply with all applicable laws. Partnering with a trustworthy background check company can also help ensure your organization’s entire background check process is in line with all relevant laws.

Pre-employ makes background checks easy and reliable. Speak with a compliance expert today.

Disclaimer:

Please be advised that the information provided here is solely for educational and informational purposes and should not be considered legal advice. It is strongly recommended that you consult with your own legal counsel for any questions regarding your specific practices and to ensure compliance with all applicable laws and regulations.

Resources

Fisher Phillips 02/24, A California Unicorn: Court Issues Favorable Background Check Ruling for Employer in Class Action JDSupra 02/14/23 <https://www.jdsupra.com/legalnews/a-california-unicorn-court-issues-7042262/>

Tony Oncidi 11/23, Former Employee Was Not Injured By Alleged Violation Of FCRA, Proskauer, 2/14/23 <https://calemploymentlawupdate.proskauer.com/2022/11/former-employee-was-not-injured-by-alleged-violation-of-fcra/>