A lawsuit that claimed messy background check paperwork distributed by Kohl’s Department Stores Inc. violated Federal law, has been tossed out by a California judge. The ruling comes fairly swiftly on the heels of the initial court appearance, which we wrote about here on ActiveCare.

Lawsuit Dismissed

The judge dismissed the case after finding the employees who filed the lawsuit failed to demonstrate any “willful” violation of the Fair Credit Reporting Act by Kohl’s.

Plaintiffs accused Kohl’s of bundling credit report disclosure forms with other paperwork. This Law360 article says, “Plaintiffs’ attorneys quoted from the FCRA, which says that job applicants must be notified in writing in a “separate, clear and conspicuous document” that the employer may obtain a credit report. Because the Kohl’s notification was combined with other materials, it wasn’t separate, clear and conspicuous, attorney Shaun Setareh of Setareh Law Group said.”

The judge, however, decided the two forms in question were separate documents based on the following evidence:

  • Each form has a separate signature by both plaintiffs.
  • The job application form is formatted differently, has a different title, and clearly serves a distinct function.
  • There is no previous case law stating the documents could not be presented together

Although the Consent and Disclosure form did contain other information, the judge ruled it was relevant to consent and disclosure and therefore wasn’t considered extraneous (which would have made it illegal).

Why Do These Lawsuits Keep Popping Up?

The FCRA lawsuits are popping up because the plaintiffs’ bar has realized that the background check industry is full of employers who are out of compliance on the consent form and adverse action. It’s very low hanging fruit. The EEOC can’t enforce or fine based on the FCRA. Only the Federal Trade Commission, Consumer Finance Protection Bureau and courts can rule and enforce the FCRA.

The EEOC has also made major headlines in the screening, human resources and employment law industries after launching its 2012 Guidance. The idea behind the Guidance (which the EEOC created in conjunction with the Federal Trade Commission) was to simplify the standards and procedures that businesses must follow if they use background checks to vet candidates. The two agencies even created two documents that spell out exactly what’s ok and what’s not ok when it comes to understanding and abiding background screening regulations.

The problem that is arising from this Guidance is that the EEOC is taking a heavy-handed approach to enforcing its rules. The agency is even being accused, in court no less, of overstepping its boundaries with the amount of class action lawsuits that it has filed in recent years. The list of businesses who have come under attack contains big names, too:

Pizza Hut

• Whole Foods


• Dollar General

Paramount Pictures

Obviously, this is causing a lot of tension, fear, and confusion for businesses, especially those small enough to not employ a full-time human resources professional or have an employment attorney on retainer.

At least one law firm is taking a stand against the EEOC’s enforcement practices. Thompson Hall writes:

“First and foremost, it is important to remember that the EEOC’s Guidance is not law as the EEOC does not possess legislative authority. Further, the EEOC has repeatedly claimed that this Guidance does not represent a major shift in how the agency viewed employer’s use of criminal information. However, in practice, the EEOC has become more aggressive in pursuing investigations.”

How Active Screening Can Help

We have compiled a compliance checklist for employers to use as a reference. 

Compliance Checklist:

1 Have an updated copy of the FCRA to reference.

2 Know the definitions the FCRA uses.

3 Provide potential employees with a clear disclosure.

4 Identify self and purpose for screening.

5 Make sure you have written consent from applicant.

6 Do not use alternative methods for screening, i.e. Google or social media.

7 Follow procedures to ensure report accuracy.

8 Re-verify results.

9 Perform an individual assessment before making a hiring decision

Employers taking adverse action must:

1 Provide oral, written or electronic notice to applicant about the Credit Reporting Agency.

2 Must include: name, address and number of the CRA that furnished the report.

3 Must also include: A statement that CRA had no influence on adverse action.

4 Provide notice that applicant may obtain report and dispute accuracy of report.

Click here if you prefer to download the list and print it out.

You can always call one of our team members if you have any questions. Reach us at 1-800-319-5580.

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