Court Rules Background Check for Independent Contractor Does Not Trigger Protections for Employment Purposes under FCRA

Fair Credit Reporting Act (FCRA)

Written By ESR News Blog Editor Thomas Ahearn             

On August 9, 2019, a ruling in the United States District Court for the Northern District of Georgia found that a background check for independent contractors does not trigger the protections applicable for a background check for “employment purposes” under the federal Fair Credit Reporting Act (FCRA).

The FCRA provides protections for a background check obtained for “employment purposes” that include obtaining the subject’s written authorization in a “stand-alone disclosure” and providing a pre-adverse action notice and summary of rights if the report leads to adverse action against the subject.

Plaintiff John Walker, Jr. applied for a job as a real estate agent with defendant RealHome Services and Solutions and he signed an agreement that explicitly described him as an independent contractor but his job offer was later rescinded allegedly based on his background check information, according to the ruling.

Walker also claimed he signed a background check consent form that violated the FCRA “stand-alone disclosure” requirement by including a liability waiver and that RealHome also violated the FCRA pre-adverse action requirements by not providing him with a copy of his report or summary of his rights.

Defendant RealHome argued that Walker lacked standing to bring his “stand-alone” claim and that both of his claims of FCRA violations failed because he was an independent contractor and not subject to the FCRA protections. The Court, as had several other district courts previously, agreed with the defendant.

The FCRA defines employment purposes as “a report used for the purpose of evaluating a consumer for employment, promotion, reassignment, or retention as an employee.” So the court was “required to apply the common law meaning of employment, which does not include independent contractors.”

Passed by Congress in 1970, the FCRA 15 U.S.C. § 1681 promotes the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies (CRAs) and protects consumers from the willful and/or negligent inclusion of inaccurate information in consumer reports.

The fact that FCRA class action lawsuits continue to be a concern for employers performing background checks in an increasingly complex legal environment was chosen by Employment Screening Resources® (ESR) as one of the “ESR Top Ten Background Check Trends” for 2019.

Employment Screening Resources® (ESR) offers employers two complimentary white papers – “Common Ways Consumer Reporting Agencies are Sued Under the FCRA” and “Common Ways Prospective or Current Employees Sue Employers Under the FCRA” – to help them comply with the FCRA.

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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