Employers who use third party vendors to conduct background checks on applicants and employees are required by the FCRA to provide a disclosure in writing stating that the background report may be used for employment purposes. It is very clear in the FCRA that the required disclosure form must be its own standalone document.
In recent years, the number of class actions against employers for FCRA violations has risen dramatically. The stakes are high for non-compliance. In early 2017, a background screening company agreed to pay $1.6 million to a class of over 65,000 job applicants for including a liability waiver in the FCRA disclosure for the background checks it conducted on applicants for its client M-1, LLC. In addition, the employer M-1, LLC was found responsible to pay statutory damages of between $100 and $1,000 per violation to the over 65,000 class members, plus punitive damages and attorneys’ fees and costs.
Companies such as Domino’s Pizza ($2.5M), Publix ($6.8M), Whole Foods ($803K), ClosetMaid Corporation ($1.8M), and Disneyland are just some of the companies that have been or are currently embroiled in class actions for including a liability waiver in their FCRA Disclosure form.
Recommendations for Employers
If you conduct background checks on your applicants and employees, it’s time to review your process and ensure that you remove any liability waivers, releases, and indemnity clauses as they are not permitted under the Ninth Circuit’s ruling. Also, as a best practice, remove any other information or terms in the documentation which could violate the FCRA requirement that it consist solely of the disclosure. This will help to ensure you avoid a costly and time-consuming class action.
If you are uncertain if your hiring process is FCRA compliant, the time is now to contact a Cisive Specialist at 1-866-557-5984 or click here.
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