A record number of lawsuits under the Fair Credit Reporting Act (FCRA) were filed in 2019. The takeaway for employers conducting background checks: comply vigilantly with the law or face the prospect of expensive litigation.
As of January 2020, FCRA complaints had spiked by 37.4% over the previous year, according to the data-tracking firm WebRecon LLC. These cases have proliferated since 2011, and over the past decade claims have more than doubled. A large percentage of them have been brought against background screening firms for reporting inaccurate information or against employers for failing to comply with requirements imposed on end users of consumer reports, such as supplying an appropriate disclosure form, securing candidate authorization, and following procedures for taking adverse actions.
Local jurisdictions have increasingly enacted fair-hiring laws that encourage or require recruiters to assess the specific circumstances behind negative results in a candidate’s screening. Instead of dismissing or releasing someone based on an identified criminal offense or financial problem, companies now commonly use so-called individual assessments to explore the context of the candidate’s recorded infractions. This allows the employer to consider whether a conviction bears on the individual’s ability to perform a job and/or whether the offense is relevant to the position for which the candidate is applying.
A caveat about the threat of litigation: FCRA cases attract the plaintiffs’ bar because remedies (that is, what the defendant/employer must pay if found liable) can include actual damages, punitive damages, and the costs of the lawsuit, including attorneys’ fees. Pamela Q. Devata, leader of the Background Screening Compliance and Litigation Defense team at the law firm Seyfarth, explains: “Similar to wage-and-hour cases, because the FCRA allows for statutory damages, these types of cases are ripe for class actions. We’ve seen a huge increase in the number of FCRA class actions in the last few years based especially on the highly technical nature of the statute. For example, claims involving whether a specific piece of paper had ‘too much’ information on it.”
To learn the basics of avoiding being run over by the class action juggernaut, stay tuned for our next post. You can also read more about individual assessments here or view our webinar.
Global HR Research (www.ghrr.com), the home of Clairiti screening technology, combines advanced background screening solutions, data and business analytics to deliver better background screening programs to thousands of customers and their candidates. Serving medium-sized businesses to Fortune 500 companies across the country, Global HR Research—recognized for the past eleven years in HRO Today magazine’s “Baker’s Dozen” list of top national background screening providers and by Workforce magazine’s “Hot List” of top background screening providers for the past seven years—is accredited by the Professional Background Screening Association (PBSA), as recognized by the Background Screening Credentialing Council (BSCC).