Class Action Lawsuit against Major National Online Retailer Underscores Need to Comply with the FCRA

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

In a class action lawsuit filed in federal court in Seattle on April 7, 2015, a major national online retailer and a staffing firm that provides workers have been sued in a class action lawsuit alleging that the defendants failed to comply with the adverse action notice requirements of the federal Fair Credit Reporting Act (FCRA) where employment was denied due to a past criminal matter.

The lawsuit alleges that Amazon.com utilized the services of staffing firm to provide seasonal workers at distribution centers. According to the complaint, the lead plaintiff applied for a job. The staffing firm performed a background check. The background check report “listed two criminal convictions – an old open container misdemeanor that belonged to Mr. Williams, and a felony conviction for cocaine possession, which did not belong to Plaintiff.”

The complaint then alleges that the felony conviction eliminated the plaintiff from consideration, according to the standards utilized by Amazon. The plaintiff was contacted and told not to show up for work because of the background check report. The plaintiff stated he told the staffing firm “that the background check, which he had not yet received a copy of, must have contained inaccurate information because he did not have any such criminal record, and was recently was cleared to obtain a permit to carry a concealed weapon, so there must have been a mistake.”

According to the litigation, the plaintiff at no time received a copy of the report or a notice of pre-adverse action. Section 604 of the FCRA is clear that if an employer intends to take an adverse action as a result of consumer report, there are certain steps the employer must follow. These steps include an obligation to provide a copy of the report to the applicant before any decision is made final as well as a copy of a document called “A Summary of Your Rights Under the Fair Credit Reporting Act” This document should be the newest version from the Consumer Protection Financial Bureau (CFPB) required under the FCRA as of January 1, 2013 and not the older version from the Federal Trade Commission (FTC). For more information, read the article “Complying with the FCRA in Four Easy Steps” by Employment Screening Resources (ESR) and available at http://www.esrcheck.com/Articles/Complying-with-the-Fair-Credit-Reporting-Act-in-Four-Easy-Steps/135/.

The purpose is to give applicants the opportunity to see the reports that contain the information that is being used against them. If the report is inaccurate or incomplete, applicants then have the opportunity to contact the Consumer Reporting Agency (CRA) to dispute or explain what is in the report. Otherwise, applicants may be denied employment without ever knowing they were the victims of inaccurate or incomplete data or a given chance to dispute the information.

Although the case is only at the pleading stage, which means there has been determination of facts whatsoever, the allegations made can be important to review because of the issues raised.

First, this case is just in another in a long line of class action cases alleging violations of basic FCRA duties. In 2014, an increasing number of FCRA class action lawsuits were filed and were settled for millions of dollars and several more lawsuits were filed. Class action lawsuits for federal FCRA violations will increase in 2015 even if no one is actually harmed. FCRA violations can range from not making legally required disclosures to not following proper “adverse action” procedures. This was one of the ESR Top Ten Background Check Trends for 2015. To read more about the growing trend of FCRA lawsuits, visit http://www.esrcheck.com/wordpress/2014/12/23/fcra-class-action-lawsuits-will-continue-increase-even-one-actually-harmed-2015/.

In addition, the case raises important considerations when it comes to employers that work with staffing vendors. In this lawsuit, even though it was the staffing firm that allegedly failed to provide the required notice process, the case is also aimed at Amazon, which is the company where the applicant would be placed and would likely be working under the direction and control of Amazon. It underscores the need for employers to work carefully with staffing providers to ensure that the FCRA requirements are being followed.

The stakes are especially high for large employers since an allegation of a “willful” violation of the FCRA can expose an employer to damages from $100 to $1,000 for every person that was the subject of an FCRA violation. More importantly, under the FCRA, an allegation of a “willful” violation can also expose an employer to punitive damages, which can be demonstrated just be a showing that the conduct was objectively unreasonably, even if no malicious intent was present.

The class action lawsuit is Williams v. Amazon.com Inc et al, Case Number 2:15-cv-00542, filed in the United States District Court Western District of Washington at Seattle, and can be found at http://www.esrcheck.com/file/Williams-v-Amazon.pdf.

NOTE: Employment Screening Resources (ESR) reminds readers of this ESR News blog that any allegations made in a class action lawsuit are not proof that a business or Consumer Reporting Agency (CRA) violated any law, rule, or regulation. There have been only allegations in the pleading stage and no factual adjudications. The fact that a demand for a jury trial has been made in the class action lawsuit does not mean there has been a finding of any liability or that any facts have been determined or any settlement entered into at the current time.

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