Employers Should Not Let Guard Down on FCRA Compliance in Wake of Supreme Court Spokeo Ruling

FCRA-graphic

Written By ESR News Blog Editor Thomas Ahearn

Employers should not “let their guard down about complying with background screening rules” such as the federal Fair Credit Reporting Act (FCRA) despite recent court rulings such as the dismissal of a proposed FCRA class action lawsuit against transportation network company Lyft, Inc. by a federal judge who cited a decision by the Supreme Court in the case of Spokeo, Inc. v Robins as a reason for the decision, according to an article on the Society for Human Resource Management (SHRM) website.

In the article “Lyft Averts FCRA Lawsuit Due to Spokeo Decision,” SHRM editor/manager Roy Maurer interviewed screening experts including Attorney Lester Rosen, founder and CEO of Employment Screening Resources® (ESR), a global background screening firm based in the San Francisco, CA area. Rosen – author of “The Safe Hiring Manual” – told Maurer the May 16, 2016 decision by the Supreme Court on Spokeo “in no way means that employers can relax when it comes to FCRA compliance.”

The article explains how a federal judge threw out a class action lawsuit against Lyft by “finding that the plaintiff could not demonstrate that he experienced actual harm as a result of technical employment screening violations.” Maurer wrote: Magistrate Judge Joseph C. Spero of the U.S. District Court for the Northern District of California ruled Oct. 5 that the claimant, Michael Nokchan, lacked standing, or the right to sue the company for alleged privacy violations of the Fair Credit Reporting Act (FCRA).

Rosen said of the Spokeo decision: “It doesn’t mean that employers have a carte blanche right to ignore the technicalities of the FCRA. Employers certainly still need to ensure that they are in compliance with their obligations and they are working with background firms that understand the FCRA inside and out.” Rosen also explained to Maurer that two things might happen if court rulings like the Lyft decision “are indicative of a barrier to being able to sue unless there are actual damages to plaintiffs”:

  • First, plaintiffs’ attorneys will focus on those cases that contain actual harm, such as employers running employment screens without consent or background check firms delivering reports with erroneous information.
  • Second, if the courts are no longer seen as a way to regulate procedural requirements of the FCRA, the regulatory agencies—the Federal Trade Commission and the Consumer Financial Protection Bureau—will fill the vacuum.

“Don’t be lulled into a false sense of security,” Rosen told Maurer. “Employers must still be vigilant with compliance.”  Rosen, a frequent speaker on background check issues, was the chairperson of the steering committee that founded the National Association of Professional Background Screeners (NAPBS) and served as first co-chair. The article is at www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/lyft-fcra-lawsuit-spokeo-decision.aspx.

As reported by ESR News, the plaintiff in the lawsuit – who is still a driver for Lyft in California – claimed Lyft failed to comply with the FCRA because the document he signed to give Lyft consent for a background check did not provide disclosures in a separate “stand-alone” document and that he was also not notified his right to receive a summary of his legal rights under the FCRA. However, the court agreed with Lyft’s assertion that the plaintiff lacked standing under Article III of the U.S. Constitution.

Judge Spero wrote in the Order Granting Motion to Dismiss in Nokchan v. Lyft, Inc., Case No. 15-cv-03008-JCS, United States District Court Northern District of California: Under Spokeo, a plaintiff who seeks to assert a claim under the FCRA is required to allege facts showing a concrete injury. While procedural violations that have resulted in real harm – or even a risk of real harm – may be sufficient to meet this requirement, Plaintiff in this case has alleged no such injury.

Judge Spero continued: Rather, based on the allegations in the complaint, Nokchan was hired by Lyft after he successfully completed its background investigation and he continues to work for Lyft. Under these circumstances, the Court can find no real harm, or a threat of such harm, that gives Nokchan standing under Article III to pursue his claims in federal court. The Court concluded that – under Spokeo – the plaintiff failed to establish he met Article III’s injury-in-fact requirement.

Two Whitepapers from ESR Help Employers Avoid FCRA Lawsuits

Employment Screening Resources® (ESR) – a leading global background screening firm – offers two complimentary whitepapers to help employers deal with the explosion of class action lawsuits involving alleged violations the federal Fair Credit Reporting Act (FCRA): Common Ways Prospective or Current Employees Sue Employers Under the FCRA and Common Ways Consumer Reporting Agencies are Sued Under the FCRA. Download both whitepapers for free at: www.esrcheck.com/Whitepapers/.

NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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