FCRA Class Actions Against Employers – New Trend?

August 28, 2014 | Bryan Barajas

FTC LogoThere is an interesting article in the SHRM Federal Resources Section about the emerging trend of FCRA Class Actions against employers. The article, written by Allen Smith, SHRM’s manager of workplace law content, discusses the importance of HR professionals to be familiar with FCRA requirements when conducting background checks on employees and applicants.


Employers have responsibilities before they conduct a background check and after if they take adverse action against someone based partly on information obtained from that background check.



Employers must provide a written disclosure to the employee or applicant that consists solely of the disclosure that a consumer report may be obtained. The employee or applicant must provide written permission for an employer to obtain the report.



Employers must provide a pre-adverse action notice to the employee or applicant if it intends to take adverse action based partly on the report’s contents. That notice must include a copy of the consumer report and the statutory summary of rights.


Five Business Days Later

The employer must provide an adverse action notice that includes:

  • The name and contact information of the consumer reporting agency that provided the report.
  • A statement that the consumer reporting agency did not make the adverse decision and cannot explain why the decision was made.
  • A statement outlining the individual’s right to get a free disclosure of his or her report from the consumer reporting agency if the request is made within 60 days.
  • A statement explaining the individual’s right to dispute the accuracy or completeness of any information in the report directly with the consumer reporting agency.


The article goes on to list action items to mitigate class-action risk, but the bottom line is employers need to be familiar and compliant with the law and should “take measures to fortify against class-action risk”.



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