FCRA Class Action Lawsuits Against Employers Becoming Routine

Blogs about FCRA Class Actions

Written By Attorney Lester Rosen, Founder & CEO of Employment Screening Resources (ESR)

Two class action lawsuits filed in federal courts in Wisconsin by the same lawyers and the same lead plaintiff within one week of each other and both alleging the same cause of action underscore the prevalence of class action lawsuits for violations of the federal Fair Credit Reporting Act (FCRA). It also demonstrates that employers can easily avoid these lawsuits by paying attention to the basics of the FCRA since both lawsuits were based on the use of language that Employment Screening Resources (ESR) has long warned employers to avoid.

On January 30, 2015, attorneys for Cory Groshek filed an FCRA class action lawsuit against a hospitality management company alleging that the Candidate Release Authorization form contained language that purported to release from liability both the employer and anyone providing information. The complaint further alleged that other extraneous information was on the form. The case was filed in United States District Court for the Western District of Wisconsin. See: http://www.esrcheck.com/file/GROSHEK_v_ALLIANCE-HOSPITALITY-MANAGEMENT.pdf.

On February 6, 2015, the same attorneys filed another lawsuit against a national cable company also on behalf of Mr. Groshek. In a similar allegation, the complaint noted that the online onboarding form for the background check contained the language: “I hereby release from liability all persons and organizations furnishing references or other information.” That case was filed in the United District Court for the Eastern District of Wisconsin. See: http://www.esrcheck.com/file/GROSHEK_v_TIME-WARNER-CABLE.pdf.

Both complaints noted that the language is “contrary to the unambiguous language of the (FCRA) statute and are in direct contradiction to judicial and regulatory guidance that has been in place for more than 16 years.”  The complaints discuss that such release language has the effect of adding excess language to the disclosure that is not permitted and that such release of liability clauses are not permitted.

The complaints both cite the Hauxwell advisory letter issued by the Federal Trade Commission in 1998 that advised employers and screening firms that the required  disclosure  forms for a background check should not contain any extraneous information and that any waivers of rights potentially violates the FCRA. See: http://www.ftc.gov/policy/advisory-opinions/advisory-opinion-hauxwell-06-12-98.

The FCRA in section 604(b((2)(A) also requires that a disclosure for a background check (called a Consumer Report) must be contained “in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes.”

In both complaints, an allegation of willfulness is made, meaning that the plaintiff’s attorneys are not just seeking $100 to $1,000 for every applicant who signed the allegedly defective forms, but also cost and attorneys fees. The willfulness allegations also allow the class action attorneys to seek punitive damages. Under the FCRA, punitive damages can be sought where an employer engaged in conduct that was “objectively” unreasonable, even if the employer did not intend any harm. See: http://www.esrcheck.com/Articles/Supreme-Court-Decision-on-Willfulness-Under-FCRA-May-Have-Dramatic-Impact-on-Employers-and-Screeners/197/.

It should be noted that these cases are entirely avoidable by following the most basic requirements of the FCRA. In the First Edition of “The Safe Hiring Manual” issued in 2004 by Employment Screening Resources (ESR), it is clearly stated that such language should not be included in a discourse. ESR had also published educational materials prior to that cautioning employers not to include such release language in the disclosure forms.  Although background checks are mission critical for any employer, it is equally critical to ensure that the process is done correctly.

FCRA Class Action Lawsuits A Growing Trend

Employment Screening Resources® (ESR) – ‘The Background Check Authority®’ – has identified the explosive growth of FCRA class action lawsuits as one the ESR Top Ten Background Check Trends for 2015. To read the blog “FCRA Class Action Lawsuits will Continue to Increase Even if No One is Actually Harmed in 2015” by ESR Founder and CEO Attorney Lester Rosen, please visit http://www.esrcheck.com/wordpress/2014/12/23/fcra-class-action-lawsuits-will-continue-increase-even-one-actually-harmed-2015/.