FCRA “Joins” the Vortex of the Alphabet Soup of Labor Laws for Employers to Watch Out For

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The employment application process has become more and more complex and a growing source of litigation against employers. The latest large retailer slapped with a lawsuit is Home Depot, in which the company is facing a class action in the U.S. District Court for the Northern District of Georgia alleging that the company runs background checks on employees and job applicants without properly notifying them or providing copies of the reports before taking adverse action against them based on the reports’ findings. The lawsuit alleges that this practice is in violation of the Fair Credit Reporting Act (FCRA).

The FCRA was enacted in 1970 during the Nixon administration, and is hardly in its adolescence. FCRA claims against employers, even class action lawsuits, are far from novel. Historically, though, such employment claims were rarely filed and did not distract the plaintiff’s bar from the feeding frenzy provided by wage and hour laws. While these types of actions will likely not escalate wildly, given the current litigious environment it is important for employers to fulfill the requirements of notice during both the hiring process and term of employment.

In the Georgia case, the lead plaintiff alleges that he submitted an online application for employment to Home Depot in which he agreed to the terms and disclosures included on the page by clicking on the “I Agree” button. He was later told that he would not be offered employment based on something the company saw on his consumer report, which it ran as a part of the application process.

The plaintiff filed suit against Home Depot claiming that it failed to properly notify him or give him a copy of the report, and as a consequence failed to hire him based on the findings in the report. The lawsuit seeks class certification of all people who applied for employment with Home Deport on or after July 13, 2013, that were subject to consumer reports, and who were not properly informed of the reports.

Under the FCRA, if an employer is going to use a report for employment purposes, it must provide written notice to the applicant (or existing employee) and must obtain an applicant’s prior written permission before obtaining the report from a consumer reporting agency.

Further, if the employer intends to use the report and takes adverse action against either the applicant or the employee based on information obtained from the report, it must provide the person with pre-adverse notice, a copy of the report, and a notice of the person’s rights under FCRA. (Note that some states have their own versions of the FCRA, which impose differing or even more stringent requirements. Employers should check the laws in the states in which they operate.)

ACCA encourages its contractors to be cognizant of FCRA requirements, and to follow these mandates to the letter. Although the added administrative procedures might be somewhat burdensome, employers are better safe than subject to violations of the Act.

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Posted In: Legal