One of the U.S.’s largest solid waste and recycling companies has reached a preliminary settlement. This agreement resolved claims that its background check violated the federal Fair Credit Reporting Act (FCRA). Under this settlement, the company agreed to pay $150,000 to settle these allegations.
According to the settlement agreement, this suit occurred after the employer procured a background check on the plaintiff. The report allegedly included extraneous information beyond the FCRA’s requirements. Following this, the plaintiff claimed that the company denied him employment based on the contents of this report.
However, he did not receive a pre-adverse action notice, which the FCRA requires the employer to provide. The FCRA states that employers must procure this notice before taking adverse actions, such as rescinding a job offer. Under the FCRA’s 1681b(b)(2)(A)(i), employers may request a consumer report after providing the applicant with a disclosure and authorization form.
This form must stand alone, “clear and conspicuous,” and “in a document that consists solely of the disclosure.” What can or cannot be in such a form has been the matter of considerable litigation. However, courts generally agree that this should consist solely of a clearly worded notification that the employer intends to acquire a background screening report.
Furthermore, the FCRA outlines a process for cases when employers decide against hiring applicants based on background reports. Section 15 U.S.C. § 1681b(b)(3) requires the company to provide the individual with a pre-adverse action notice and time to respond. This pre-adverse action notice should notify the individual of the report’s results. It should also include a copy of the background check and a description of their rights under the FCRA.
This case moved to the U.S. District Court for the Middle District of Florida before both parties agreed to participate in mediation. As a result, it had to return to state court after the parties reached an agreement at mediation. The proposed settlement will undergo a Fairness Hearing on October 18, 2023.
This hearing will determine whether the court approves the settlement. If approved, the settlement will benefit individuals who applied or worked in a position with the company. However, the case will only affect those subjected to a consumer report obtained on or after June 5, 2020.
This proposed settlement illustrates the risks of failing to comply with FCRA and other background screening laws. As such, employers should consider working with a trusted screening provider. The right partner will use their experience and professional knowledge to ensure employers comply with relevant laws.
You can avoid this altogether by staying updated with compliance regulations. Read our free guide Adverse Action Notice Protocols in Compliance With FCRA to learn more.