Consumers and attorneys are looking more closely at background check reports and laws governing employment screening and filing more lawsuits against employers. On one hand, employers are being sued by victims that alleged the employer failed to perform adequate screening. On the other, employers and background screening firms also face lawsuits from job applicants complaining about the accuracy of background reports, or failure to meet the guidelines of the federal Fair Credit Reporting Act (FCRA). In a number of cases, class action suits are being utilized as the vehicle to bring legal actions against employers. This is Trend Number 7 of the fifth annual ‘Employment Screening Resources (ESR) Top 10 Trends in Background Checks’ for 2012. To view the list of trends, visit

It is anticipated that in 2012, this trend towards lawsuits will continue.  The lesson to be learned is that employers need to be diligent in their hiring, and at the same time, ensure that they are following the FCRA rules that regulate the collection, dissemination, and use of consumer information, including consumer credit information. For background screening firms, the trend will mean that it is even more critical  to review policies and procedures  to ensure accuracy and legal compliance given how heavily regulated background checks are.

In the past year, several FCRA-related lawsuits that were reported on by ESR News show the need for legal compliance by employers and background screening firms with the FCRA:

New Class Action Lawsuit against Major Financial Institution for FCRA Violations Demonstrates Importance of Legal Compliance (12/15/2011)

In a recent example, a class action case filed against one of the nation’s top 10 banks on behalf of an employee alleging violations of the FCRA shows that legal compliance is a critical part of any background screening program. According to the Plaintiff’s Attorneys, the lawsuit alleges that the financial institution obtained background checks in violation of the FCRA and failed to provide required notices. The Plaintiff seeks to represent a class of all of the financial institution’s employees and job applicants for the past three years.

The lawsuit alleges the financial institution violated the FCRA in two ways:

  • First, the lawsuit alleges that the financial institution’s authorization form is flawed. The Plaintiff alleges that by burying its background check authorization in a job application, including extraneous information, the financial institution violated the FCRA rule that requires that a consumer receive a “clear and conspicuous” disclosure in a document that consists solely of the disclosure that a background report may be obtained for employment purposes.
  • Second, the lawsuit also alleges that the financial institution failed to provide copies of the background reports when it used them to take adverse employment actions. The FCRA requires employers to provide consumers with copies of their background checks if the employer intends to take adverse action that is based in any part on the background check report, along with a statement of rights prepared by the Federal Trade Commission (FTC), so consumers have an opportunity to contest any information they feel is inaccurate or incomplete.

Based on the Attorneys for the Plaintiff’s understanding of the financial institution’s practices, everyone who has applied or worked for the financial institution in the past three years should be eligible to receive statutory damages if the lawsuit succeeds.

To read the full story, visit:

Jury Awards 7 Million Dollars to Family of Truck Driver Killed in Accident in Negligent Hiring Case (11/15/2011)

The family of a truck driver killed in a 2008 accident in Arkansas was awarded $7 million in damages in a wrongful death lawsuit brought against a timber company and its truck driver in an Arkansas Federal Court. A group of Kansas City-area lawyers serving as counsel for the family of the man killed in the accident argued that the timber company had negligently hired the truck driver who caused the accident without conducting a basic background search that would have quickly revealed a history of unsafe driving that included having his license revoked twice.

The case primarily involved the timber company truck driver’s qualifications to drive a commercial vehicle and the timber company’s failure to appropriately screen its drivers. Evidence was introduced at the trial that the timber company truck driver never should have been permitted to drive a tractor trailer since he had lied on his application and had received two license revocations, previous infractions that the timber company could have easily discovered with a simple background search that took only 15 minutes and cost $15. The deadly crash occurred only 19 days after the truck driver was allegedly negligently hired by the timber company for the driving job.

To read the full story, visit:

Class Action Lawsuit Demonstrates Importance of Employers following the Fair Credit Reporting Act (9/16/2011)

A class action lawsuit that was allowed to go forward by a federal district court earlier this year underscores the importance of employers following the federal Fair Credit Reporting Act (FCRA) when conducting background checks, and working with background screening firms that help educate employers on following basic procedures. The case alleged that an employer committed two violations of the FCRA:

  • The employer disqualified job applicants on the basis of information from a consumer report without appropriate disclosure forms from the applicant, and
  • After disqualifying the applicant, the employer failed to give the applicant a reasonable period of time to dispute the information contained in the report before refusing to hire that applicant. In other  words, the class action suit alleged a violation of the “pre-adverse action” requirements whereby a an applicant to a reasonable time to review and dispute the background check report before a final action is taken to deny employment.

The attorneys for the plaintiff are seeking statutory damages and punitive damages. The FCRA also provides for attorneys’ fees.

To read the full story, visit:

Class Action Case Shows Importance of Background Screening Firms Following Fair Credit Reporting Act when Reporting Sexual Offender Data (8/30/2011)

A class action lawsuit filed in federal court on August 23, 2011 underscored once again the importance of background screening firms following the Fair Credit Reporting Act (FCRA). According to the civil complaint for damages, a background screening firm allegedly reported sexual offender data on applicants based solely upon a name match only, without making any effort whatsoever to confirm if the data belonged to the applicant. The suit alleges that such a practice violated the rule contained in FCRA section 607(b) that a screening firm must take reasonable procedure to assure maximum possible accuracy.

In addition, the class action suit contends the screening firm “also reported public record information to employers without informing consumers that such information was being reported and without maintaining strict procedures to assure that the public information that it reported was complete and up to date” as required by FCRA section 613. In this case, the lead plaintiff had a common name, and the screening firm reported seven possible sexual offender matches relating to three individuals with the same name.

Based upon his allegations, it appears that matching the records to the plaintiff would have demonstrated the sexual offender record did not belong to the plaintiff.  As a result, the lawsuit alleges that the background screening firm acted in reckless disregard of its duties, and is seeking punitive on behalf of the class of individuals who have been wrongly identified as sex offenders by the screening firm as well as attorney’s fees.

To read the full story, visit:

Class Action for Failure to Follow Fair Credit Reporting Act for Employment Screening Settles for $4.3 Million (3/18/2011)

In a case that once again emphasizes the importance of employers following the federal Fair Credit Reporting Act (FCRA) for employment screening, attorneys for thousands of mass-transit drivers and school bus drivers announced approval of a class action settlement of 4.3 million dollars for failure to adhere to the requirements of the FCRA. The proposed settlement was approved by a federal Judge in Illinois stemming from a national class-action suit involving allegations of FCRA violations against sister companies that employed drivers.

The suit alleged that the two companies – both subsidiaries of a company in Great Britain – obtained criminal background checks on drivers and job applicants without their written authorization and in some cases denied them jobs without providing them a copy of their criminal background report in violation of the federal FCRA law. The FCRA requires that all background checks be conducted with consent and that in the case an adverse employment action occurring as a result of a background check, the applicant is entitled to certain notifications including a copy of the report. The overall settlement was for $5.9 million, with $4.3 million going to the class action and the court awarding an additional $1.6 million for court costs and attorneys fees.

To read the full story, visit:

Database Searches Also Source of Lawsuits

Another source of lawsuits are database searches that contain inaccurate and incomplete information that are used for background checks. A recent news article from the Associated Press, ‘AP IMPACT: ‘I’m being punished for living right’ – Background check system is haunted by errors,’ serves as an example of how some background checks may contain inaccurate and incomplete information. The story is available at:

Employment Screening Resources – a nationwide background check firm accredited by The National Association of Professional background Screeners (NAPBS) – takes the position that databases should only be used for secondary research and not as the primary source of information since inexpensive and instant database searches with unreliable results could may miss criminal records and give both employers and consumers a false sense of security.

Background checks based solely upon databases have substantial issues in terms of timeliness, completeness, and accuracy. Database searches may contain both “false negatives,” where there is no criminal match with the person being checked but that person is a criminal, and “false positives,” where there is a criminal match with the person in the background check but upon further research it is not the same person. Rosen adds that any positive match – called a “hit” – must be verified by reviewing the actual court records from a courthouse. While background checks using database searches are useful as secondary tool, a professional background check should include county court level searches carried out by a professional accredited background check company or a licensed private investigator.

Background Checks Heavily Regulated

All of the cases mentioned also underscore the fact that background checks are heavily legally regulated, and that employers are best served by working with a professional background screening firm that provides assistance with legal compliance, and not just a data vendor that sells reports. Although a background screening firm cannot provide legal advice, a background screening firm can currently advise an employer on basic compliance issues and industry standard approaches.

The cases also demonstrates why an employer should consider only working with a background screening firm that is accredited by the National Association of Professional Background Screeners (NAPBS).  As part of the accreditation process, a background screening firm must demonstrate that it provides Client Education, including Client Legal Responsibilities, Client Required Documents, and Adverse Action compliance. For more information on accreditation, visit:

Background checks are a necessary step in avoiding “bad hires” and negligent hiring lawsuits. Even after the most diligent candidate selection process, hiring someone without conducting a thorough background check can lead to major legal and financial ramifications for your company. If a new hire is dishonest about his or her education, employment or criminal history, employers could face the burden of having an unfit or unqualified worker wasting time and resources or even having a violent employee in their office. If employers hire employees they knew – or in the exercise of reasonable care should have known – were dangerous, unfit, or unqualified for the position, employers can be sued for negligent hiring if injuries or death occur.

These lawsuits demonstrate that violations of the FCRA can create large potential liability.  Potential class members, including employees and prospective employees, may be entitled to statutory damages of up to $1,000 for each violation in the case of will non-compliance. Class action lawsuits also create exposure for large awards of attorneys fees and the potential exposure to punitive damages.  A United States Supreme Court case decided in June 2007, Safeco Ins. Co. v. Burr, substantially increased the risk of punitive damages under the FCRA by ruling that a reckless disregard of the FCRA could be sufficient to show “willful” non-compliance. The net effect is that it is now easier to sue an employer or a background screening firm for punitive damages. More information about the case is at:

To be clear, the mere fact that a lawsuit is filed and allegations are made by no means proves the validity of the claims, and filing of the lawsuit is merely the first step in the legal process. However, this sort of lawsuit underscores the need for employers to carefully review background checking programs and to work with accredited background screening firms that can provide information to assist in compliance with the federal FCRA and various other federal and state laws concerning background checks.

Employment Screening Resources (ESR) provides its clients substantial educational materials designed specifically to assist in compliance matters.  Although a background screening firm cannot provide legal advice, employers can expect a professional background screening firm to provide industry standard guidance that assists in compliance.  The ESR web site contains an article called “The FCRA in Four Easy Steps” that addresses the issues raised in this legal action at:

For more information about background checks and compliance with the FCRA, visit Employment Screening Resources (ESR) at or call ESR toll free at 888.999.4474.

The fifth annual ‘Employment Screening Resources (ESR) Top 10 Trends in Background Checks’ for 2012 is available at

About Employment Screening Resources (ESR):
Founded in 1997 in the San Francisco, CA area,
Employment Screening Resources (ESR) literally wrote the book on background screening with “The Safe Hiring Manual” by ESR Founder and CEO Lester Rosen. ESR streamlines the screening process and reduces administrative overhead though its proprietary technology solutions.  ESR is accredited by The National Association of Professional Background Screeners (NAPBS®), a distinction held by less than two percent of all screening firms. This important recognition was achieved by successfully passing a third party audit demonstrating compliance with the NAPBS Background Screening Agency Accreditation Program. By choosing an accredited screening firm like ESR, employers know they have selected an agency that meets the highest industry standards. For more information about ESR, visit or call toll free 888.999.4474.

About ESR News:
The Employment Screening Resources (ESR) News blog –
ESR News – provides employment screening information for employers, recruiters, and jobseekers on a variety of topics including credit reports, criminal records, data privacy, discrimination, E-Verify, jobs reports, legal updates, negligent hiring, workplace violence, and use of search engines and social network sites for background checks. For more information about ESR News or to send comments or questions, please email ESR News Editor Thomas Ahearn at [email protected].


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