Disclosures! Disclosures! Disclosures!
Like several other restaurants before them, Waffle House is dealing with a lawsuit alleging unfair background check procedures. This time the lawsuit against the 24-hour diner stems from improper communication about, and disclosure forms for, conducting a background check.
A man claims that Waffle House illegally ran a background check on him and didn’t:
- provide proper disclosures
- give him a copy of the report
- allow him to dispute alleged inaccuracies
- provide a separate post-adverse action notice
All of these things violate the Fair Credit Reporting Act (FCRA).
Waffle House says it intends to “vigorously defend our company against these claims.”
Back to FCRA Basics
If it feels like you’ve seen this story before, it’s because you have… just with a different restaurant name. We recently wrote a similar post about Chipotle’s legal beef, and Panera and Pizza Hut have also gone to court for background check stuff.
We keep scratching our heads as to why so many big name companies keep falling victim to these insufficient screening practices. So, we’re gonna head back to basics and start from the beginning so you can hopefully learn how to prevent this from happening to your company.
The Fair Credit Reporting Act (FCRA) is the federal law that oversees employers’ use of background reports during the hiring process. The law regulates the exchange of information between Consumer Reporting Agencies (CRAs) and employers.
A company is a CRA if it assembles and evaluates consumer report information and provides those reports to third parties for monetary purposes. Active Screening is a CRA because we collect, assemble, evaluate and report consumer information to companies who hire us to conduct background checks on candidates.
The FCRA holds CRAs and the creditors that provide the information in your credit report responsible for correcting inaccurate or incomplete information in your report. The FCRA is detailed and rigorous. One of the most important steps it requires of employers and CRAs is to use proper disclosure forms.
By law, you have to be informed that a background check is part of the hiring process. The law also states that you have to sign off on it (authorize) before a CRA can conduct the screening. That’s where these disclosure forms come in. If those forms do not comply with the FCRA, it is nearly impossible to defend class action claims on the merits.
Disclosure Forms, Folks!
And that’s where we find those big name companies – in the throes of costly lawsuits because the disclosure forms weren’t up to FCRA standards. This “tiny hiring technicality” is making a lot of employment attorneys rich!
Here’s what a disclosure form needs to have:
• It’s written.
• It’s asked for on a form separate from any other forms related to the candidate’s application for the job.
• It’s required if you will hire an outside agency (like Active Screening) to check out a candidate.
• Consent often includes the right to inquire about a candidate’s credit report (but this should be specifically stated).
- There can be no waivers, additional wording, or other unneccessary information on the form that can be confusing to applicants.
- The disclosure must provide specific information about the person’s rights to obtain information regarding the investigative report, including that they can view the file maintained by the consumer reporting agency, obtain a copy of the file by mail or in person, or obtain a summary of the report over the telephone.
• It’s required to obtain extra information like school transcripts or military service records.
- An applicant does NOT have to consent to a background check. You are entitled to take them out of consideration if they do not consent.
The Service Industry is Particularly Vulnerable
Restaurants and retailers are particularly susceptible to these violations because of the heavy turnover they incur. The more times you seek applicants and invite candidates into your hiring process, the greater chance you have of slipping up. The revolving door of talent coming into stores and restaurants makes them the perfect foils for keen employment lawyers and knowledgeable candidates.
Since tourism season is almost upon many areas of the country, you might want to brush up on this post:
We’ll keep an eye out as the Waffle House case develops. In the meantime, check out our Resource Page to look at some templates for disclosure forms. We provide these as a free-of-charge service to our visitors and readers in the hopes that more people will become informed about proper hiring techniques and we can work together to eliminate costly lawsuits.
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