Another big name company and its contracted background check firm are under attack for allegedly dropping the ball during pre-employment screening practices. This time, the Hertz Corporation, Dollar Thrifty Automotive Group, Inc., and Sterling Infosystems, Inc. are accused in a new federal lawsuit of violating the Fair Credit Reporting Act (FCRA) during criminal background checks of Hertz job applicants.

“Filed in San Francisco federal court, the nationwide class action lawsuit alleges that Hertz and Sterling failed to comply with FCRA’s notice requirements prior to taking adverse actions against job applicants and that Sterling has failed to notify job applicants when it furnishes Hertz with negative background check reports and to follow strict procedures to ensure the accuracy and completeness of those reports,” reports the law firm Outten & Golden LLP and the nonprofit organization Lawyers’ Committee for Civil Rights of the San Francisco Bay Area.

If the allegations are proved true in court, Hertz will join a surprising number of other well-known companies who have failed to follow FCRA law.

FCRA Basics

The Fair Credit Reporting Act is, essentially, the primary law that governs the actions of Consumer Reporting Agencies (CRAs) and employers when conducting background checks. In it simplest form, the FCRA is pretty easy to follow. If you (the employer) intend to screen candidates, you must:


Notify candidates in writing that you want to background check them. Ask for their permission in writing. This needs to be done on documents that are entirely separate from the application and can’t contain any other information pertaining to the hiring process. 

Before obtaining a consumer report from a consumer reporting agency, you must provide certification to the reporting agency that you 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; will not use the results from the report in a manner that violates federal or state equal opportunity laws.

If you plan 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.

This last component is where a lot of employers, or the screening agency with whom they choose to work, get sloppy. And being sloppy will cost you big time if you’re caught, like Hertz and Sterling Infosystems allegedly have been.

How to Comply with AA

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.

The lawsuit alleges that Hertz repeatedly failed to follow these directives. Katrina L. Eiland, of Outten & Golden LLP, said, “The FCRA provides important protections for employees and job seekers. Companies must comply with strict requirements before obtaining and using background check information for employment purposes. Hertz’s practice of refusing to hire applicants without giving them a chance to review, let alone dispute or provide more information about, their background check results, deprives job seekers of their rights.”

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