The importance of legal compliance and background checks was underscored in the filing of a class action lawsuit in the Los Angeles County Superior Court on November 1, 2013 against a Florida based background screening firm for violations of the federal Fair Credit Reporting Act (FCRA).  The lawsuit seeks statutory damages that can be $100 to $1,000 for every consumer that was the subject of a background check done using the forms and methods that were the subject of the complaint.  The lawsuit also request punitive damages. The law also provides for attorneys fees. The case is Los Angeles County Superior Court case BR 526352.

The complaint seeks to certify the matter as a class action on the basis that numerous job applicants were screened using the same allegedly non-complaint forms and search methods.

The FCRA regulates background checks nationally, and the activities of Consumer Reporting Agencies (CRAs) which is the technical term for a background screening firm in the FCRA.  The law both regulates the forms and notices that are required, as well as standards of due diligence in reporting information to an employer.

In the court filing, the plaintiff contends that he applied for a job and signed forms that did not comply with the FCRA because:

  • 1. The form contained a waiver of liability of claims against the CRA and the employer;
  • 2. The CRA violated the rule that the authorization form be a standalone form that is clear and conspicuous in it meaning, because it had extraneous language asking about past criminal matters; and
  • 3. The form also indicated it would go back ten years which in some instances according to the complaint can violate the FCRA.

Although under the FCRA it is the employer’s duty to furnish a legal authorization and disclosure form, the complaint alleges that a CRA can provide a report “only if” the employer has certified to the CRA that it will comply with the disclosure requirements under the FCRA.   The complaint alleges that by supplying the employer with forms that were out of compliance, the CRA violated the FCRA by conducting background checks using non-complaint forms.  The employer was not named as a defendant in the action.  The Plaintiff also alleged that the CRA failed to exercise due diligence in accordance with the FCRA in the manner in which criminal records were obtained and reported.  The complaint contends that the CRA reported criminal cases that according to the civil complaint did not belong to the Plaintiff.   Per the allegations, a Los Angeles criminal case was reported that did not exist and a North Caroline matter was reported for an offense that did not exist.

The plaintiff claimed he was denied employment as a result of the inaccurate criminal report.  The lawsuit also requests punitive damages. The U.S. Supreme Court in Safeco vs. Burr 551 U.S. 47 (2007) ruled that an entity can face punitive damages if it acts willfully under the FCRA by either knowingly or recklessly disregarding its statutory duty.  Even if a screening firm or employer believes it is acting lawfully that is NOT a protection from an allegation of willful violation of the FCRA and exposure to punitive damages if the defendant should have known it was acting out of compliance.

As ESR has noted in previous blogs, the impact of that ruling was to make it easier to allege punitive damages.  For more information on the Safeco case, see the ESR blog “New U. S. Supreme Court Case Decided June 4, 2007 on Willfulness Under the FCRA May Have Dramatic Impact on Employers and Screening Firms in the Future” at:

Although this case is only at the beginning stages, and there have been no factual determinations, it does demonstrate that the employment screening is highly legally regulated, and is subject to number laws and regulations.  Employers have a duty of due care in hiring which makes background checks mission critical.  At the same time, it is important for employers to follow all applicable federal and state laws and regulations.

(Note: It is the editorial policy of ESR not to identify firms that have been sued where there have been no factual adjunctions and there are only allegations in the pleading stage.  An allegation in a civil complaint is not proof that a CRA or business has violated any law, rule or regulation.)

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