Fair Credit Reporting Act (FCRA)

Written By ESR News Blog Editor Thomas Ahearn

On September 1, 2020, a United States District Court judge found that a plaintiff lacked standing to sue a former employer for conducting a background check when she was hired and that a technical violation of disclosure requirements under the federal Fair Credit Reporting Act (FCRA) did not create an “injury in fact.”

In Kenn v. Eascare, LLC et al., plaintiff Nicole Kenn signed a disclosure form and authorization allowing defendant Eascare to perform a background check on her when she applied for a job as an Emergency Medical Technician (EMT) that also included a waiver releasing the defendant from any liability resulting from the background check.

Kenn left Eascare a year later in October 2019, claiming she was retaliated against for her complaints about sexual harassment. In December 2019, she filed suit against her previous employer, manager, and supervisor, alleging that, among other things, the defendants violated the FCRA by running background checks when hiring.

Under the FCRA, a person may not procure a background check report unless “a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured… in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes.”

In addition to discrimination and retaliation claims, Kenn claimed Eascare violated the “standalone” disclosure and authorization requirements of the FCRA by including the liability waiver, as well as other extraneous language, on its disclosure form and ran background checks on her and others without proper authorization.

But Judge Allison J. Burroughs dismissed the FCRA claim in the U.S. District Court District of Massachusetts, finding that the plaintiff failed to demonstrate an injury-in-fact. “The mere fact of technical noncompliance does not establish that individuals have suffered a sufficiently concrete injury,” Judge Burroughs wrote.

“‘The Court thus concludes that violation of the FCRA’s stand-alone document requirement does not automatically cause a concrete injury for purposes of Article III standing. In doing so, the Court joins the vast majority of other courts that have so held,’” Judge Burroughs concluded. The decision is available here.

On May 16, 2016, the Supreme Court of the United States ruled in Spokeo v. Robins that consumers must prove “an injury in fact” in class action lawsuits for alleged “bare” violations of a federal statute such as the FCRA. The case involved a man who filed a lawsuit against an online “people search engine” for alleged FCRA violations.

Due to Article III of the United States Constitution, courts have developed the doctrine of Article III standing to “limit the category of litigants empowered to maintain a lawsuit in federal court,” according to Spokeo v. Robins. The Plaintiff must have suffered a concrete injury that is fairly traceable to the defendant’s alleged conduct.

Enacted by Congress in 1970, the FCRA 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 their consumer reports, including consumer credit information.

“A District Court opinion has limited authority over other federal courts, but the reasoning that some harm has to occur can be very persuasive. However, this does not mean employers can let their guard down when it comes to FCRA compliance,” said Attorney Lester Rosen, founder and CEO of Employment Screening Resources® (ESR).

“Employers should make every effort to ensure their forms are in compliance with the latest legal decisions from courts across the country to avoid unnecessary litigation. Many employers operate in more than one federal jurisdiction, so it is important to have disclosure forms that follow the most recent cases on the subject,” he said.

Employment Screening Resources® (ESR) – a leading global background check firm ranked the #1 screening provider by HRO Today – offers FCRA compliant background checks and whitepapers on how employers may avoid FCRA lawsuits and on how CRAs may avoid FCRA lawsuits. To learn more, visit www.esrcheck.com.

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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