Fair Credit Reporting Act (FCRA)

Written By ESR News Blog Editor Thomas Ahearn

On August 29, 2018, the United States Court of Appeals for the Seventh Circuit affirmed and reversed in part and remanded a case that claimed a potential employer violated the federal Fair Credit Reporting Act (FCRA) by withdrawing a job offer based upon information in a background check report without providing the applicant with a copy of the report and a written summary of rights under FCRA, and that a previous court was mistaken in finding the applicant lacked Article III standing to pursue legal action.

In its decision in SHAMECA S. ROBERTSON v. ALLIED SOLUTIONS, LLC, the U.S. Court of Appeals for the Seventh Circuit concluded: Based on information discovered in a background check, Allied rescinded Robertson’s job offer without furnishing Robertson a copy of that report on which it relied. By failing to do so, Allied deprived her of the chance to review it and present her side of the story. That is the very reason why the FCRA obligates employers to produce a copy of the report before taking adverse action.

The plaintiff Robertson applied for a job with defendant Allied Solutions, LLC, which offered her the position but ran a background check before she reported to work. Certain “non‐conviction information” turned up in Robertson’s background check which prompted Allied to revoke the job offer. Robertson claimed a human resources department representative from Allied told her only that the job offer was being rescinded “because of information in her ‘criminal background check’ report.”

Employers relying on a background check for adverse employment decisions must provide applicants with a copy of the report and a written description of rights under the FCRA before acting. Robertson claimed Allied provided neither to her and she responded with a lawsuit that claimed Allied failed to furnish clear and conspicuous disclosure forms and took an adverse employment action based on her background check without first supplying a copy of the report or a written summary of FCRA rights.

The U.S. Court of Appeals for the Seventh Circuit accepted Robertson’s allegations and found that, in part, Allied’s alleged violations of the FCRA caused her concrete injury and so reversed the earlier dismissal for lack of jurisdiction of one of Robertson’s claims and remand for further proceedings. The United States District Court for the Southern District of Indiana, Indianapolis Division’s dismissal of the other claim was proper because its authority to adjudicate must exist before it can resolve the case.

“What is important about this case is that the appeals court ruled that a consumer is entitled to a notice of adverse action even if the report is allegedly accurate because without such notice the consumer has no opportunity to plead their case or present other facts. In other words, accuracy has nothing to do with the right of a pre-adverse action notice,” explains Attorney Lester Rosen, the founder and Chief Executive Officer (CEO) of global background check firm Employment Screening Resources® (ESR).

“Apparently, there may have been some non-criminal but accurate information that caused the withdrawal, and the employer did not perform adverse action. That is a violation of the FCRA. An employer must provide pre-adverse action notice along with a statement of rights if the report was used in whole or in part to deny employment, regardless of whether the information was accurate or not. Under Spokeo that was enough to show concrete harm, and underscores the need to understand  the pre- and post-adverse action requirements,” adds Rosen, author of ‘The Safe Hiring Manual.’

On May 16, 2016, the U.S. Supreme Court ruled that consumers must prove “concrete injury” in lawsuits for alleged “bare” violations of federal statutes like the FCRA in the case of Spokeo v. Robins which involved a man who claimed he suffered an injury when incorrect information about him was published online. The U.S. Supreme Court stated in its opinion: Article III standing requires a concrete injury even in the context of a statutory violation. For that reason, Robins could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.

The fact that employers are still being targeted in class action lawsuits for technical violations of the FCRA even after the Supreme Court ruling in the Spokeo case is one of the “ESR Top Ten Background Check Trends” for 2018. “In no way did the Supreme Court decision in Spokeo mean employers could relax obligations for FCRA compliance,” warns Rosen. “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 FCRA Lawsuits

Employment Screening Resources® (ESR) – a leading global background check firm – offers two complimentary whitepapers written by ESR founder and CEO Attorney Lester Rosen that examine the many causes that lead to FCRA class action lawsuits: “Common Ways Prospective or Current Employees Sue Employers Under the FCRA” and “Common Ways Consumer Reporting Agencies are Sued Under the FCRA.” To access the entire ESR White Paper Library, visit www.esrcheck.com/Tools-Resources/Whitepaper-Library/.

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.