Frito-Lay Agrees to Pay $2.4 Million to Settle Class Action Lawsuit Claiming Improper Background Checks

Written By ESR News Blog Editor Thomas Ahearn

On April 12, 2018, Frito-Lay Inc. – a subsidiary of PepsiCo – agreed to pay $2.4 million to settle a class action lawsuit that claimed the snack food manufacturer violated the federal Fair Credit Reporting Act (FCRA) , the Investigative Consumer Reporting Agencies Act (ICRAA), and the California Consumer Reporting Agencies Act (CCRAA) by using improper disclosure forms for background checks.

The FCRA requires employers to use certain documents and to follow specified policies and practices when they use background checks to assess the qualifications of prospective and current employees. Pursuant to FCRA section 1681b, no one run background checks for employment purposes without providing a “clear and conspicuous disclosure… in a document that consists solely of the disclosure.”

A plaintiff may be entitled to statutory and punitive damages if a defendant willfully violates the FCRA: “any person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer in an amount equal to the sum of… damages of not less than $100 and not more than $1000… such amount of punitive damages as the court may allow.”

Under the California ICRAA, when an employer obtains an “investigative consumer report” with information on a consumer’s character, general reputation, personal characteristics, or mode of living, the employer must provide “a clear and conspicuous disclosure in writing to the consumer at any time before the report is procured or caused to be made in a document that consists solely of the disclosure.”

The lawsuit claimed the disclosure forms in effect during the class periods from January 12, 2015, to November 7, 2016, (for Frito-Lay frontline non-exempt positions) and from January 12, 2015, to December 15, 2016 (for Frito-Lay salaried/exempt positions) violated the stand-alone disclosure requirement by containing extraneous information such as online links to marketing web pages.

A class of 38,174 job applicants will share the settlement if it receives court approval. The lawsuit also named Frito-Lay’s parent company, PepsiCo, and its background check vendor. The settlement in Chism v. PepsiCo, Inc. and Frito-Lay, Inc., Case 3:17-cv-00152-VC, in the United States District Court Northern District of California, is available at www.esrcheck.com/file/Chisum-v-Frito-Lay-Settlement.pdf.

The fact that employers are still being targeted by class action lawsuits involving the FCRA even after the U.S. Supreme Court ruled in the case of Spokeo v. Robins that plaintiffs must prove “concrete injury” for alleged “bare” violations of a federal statute like the FCRA to obtain Article III standing is one of the “ESR Top Ten Background Check Trends” for 2018 selected by Employment Screening Resources® (ESR).

“In no way did the Supreme Court decision in Spokeo mean employers could relax obligations for FCRA compliance,” explains ESR founder and CEO Attorney Lester Rosen, author of ‘The Safe Hiring Manual,’ a comprehensive guide to employment background checks. “Employers must ensure they comply with the FCRA and work with a background screening firm that understands the FCRA inside and out.”

ESR Whitepapers on Reasons for FCRA Lawsuits Over Background Checks

Employment Screening Resources® (ESR) offers two complimentary whitepapers written by ESR founder and CEO Attorney Lester Rosen – “Common Ways Prospective or Current Employees Sue Employers Under the FCRA” and “Common Ways Consumer Reporting Agencies are Sued Under the FCRA” – to show employers how to avoid FCRA lawsuits involving background checks for employment purposes.

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.

© 2018 Employment Screening Resources® (ESR) – Making copies or using of any part of the ESR News Blog or ESR website for any purpose other than your own personal use is prohibited unless written authorization is first obtained from ESR.