Whole Foods, Inc. has just become the latest victim of a class action lawsuit filed against them for allegedly violating the Fair Credit Reporting Act (FCRA) in their hiring practices.  The lawsuit claims Whole Foods’ online application seeking applicants’ approval for running criminal background checks used incorrect language in that request. In turn, the suit is seeking damages for up to $1000 for each applicant Whole Foods has run a consumer report on since January 2009. The lawsuit states there are thousands of individuals listed in the case.

So where and how did Whole Foods go wrong?

The plaintiff in the case, Esayas Gezahenge claims that while filling out his initial online application in April of 2007, he was presented with a consent form which contained extraneous information. The FCRA specifically states the “Consent” form must be signed, but must contain nothing other than the required authorization and disclosure.  In this specific instance, the form contained a liability release for companies providing and receiving information for the background check. After then running a background check, the lawsuit states that the plaintiff was then presented with the proper “Consent” form to sign.

This is not the first case of it’s kind, nor will it be the last.  Whether a company fails to obtain written authorization and disclosure prior to a background check, or fails to provide pre-adverse action or adverse action notices, these types of lawsuits are expected by nearly all industry experts to begin piling up. HR departments should take note and act sooner than later in reviewing their screening programs if they hope to avoid FCRA or State related compliance issues.

So how can you protect your company?

Written Disclosure and Authorization Required

The FCRA requires any employer intending to run a consumer report to first disclose to applicants or employees that a consumer report may be obtained for employment purposes. This disclosure cannot be included in an employment application or other document that contains any extraneous information. The employer must also obtain an employee’s or applicant’s written consent before running the report.

Reporting Requirements

Employers also must comply with specific reporting requirements. Before obtaining a consumer report from a consumer reporting agency, the employer must provide certification to the reporting agency that they are  requesting the report for employment purposes;have provided the required disclosure to the applicant; have obtained the necessary written consent to obtain the report; will provide the applicant with a copy of the report along with notifying them of their rights before taking any adverse action based in whole or in part on the results; an will not use the results from the report in a manner that violates federal or state equal opportunity laws.

Pre-adverse Action and Adverse Action Notices

If employer plans to take any adverse action based in whole or in part upon results obtained from a consumer report, the FCRA requires the employer to provide specific notifications to the applicant or employee.

An “adverse action” is either a denial of employment or any other decision that adversely affects any current or prospective employee. The FCRA requires employers to provide a copy of the consumer report results to the applicant or employee and additionally provide them with a copy of their rights under the FCRA (the “Summary of Rights Under the FCRA”) before taking adverse action based upon information contained in the consumer report.

When the employer takes adverse action, they must then provide the applicant or employee with the following information:

  1. Name, address, and telephone number of the consumer reporting agency issuing the report
  2. Statement that the consumer reporting agency was not the decision maker and can not explain why the adverse decision was made
  3. Statement regarding the applicant or employee’s right to obtain a free disclosure of the report from the agency if the applicant or employee requests the report within 60 days of notice of the adverse action
  4. Statement regarding the applicant or employee’s right to dispute directly with the consumer reporting agency the accuracy or completeness of any information provided by the agency.

A reliable background screening company will provide you with compliance expertise necessary to meet all demands. They will also keep you informed on the constantly evolving regulations changes. Many, such as active screening have software platforms that will have all the forms and notices canned and ready for you to use, without the worry of designing them yourself. Platforms such as ACTivate will be integrated with, or can integrate with your existing ATS to make the screening process that much easier.

No matter what your approach, you should take the time to review your compliance with FCRA and State mandates before it’s to late.

For other best practices subscribe to our blog here, and download our free 23 page guide to Applicant Background Screening in 2014.



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