employer pre-employment background check

The focus on employment background checks is not going away. A few weeks ago I wrote about Dollar General’s $4 million dollar settlement of a class action lawsuit based on alleged violations of the Fair Credit Reporting Act (FCRA). Since that time, Publix Super Markets Inc. settled an alleged FCRA class for roughly $6.8 million for an alleged failure to have a stand alone disclosure about a background check in its application process. To top it all off, the Federal Trade Commission (FTC) just issued Background Checks: Tips For Job Applicants and Employees with tips for the potential FCRA plaintiff The FTC’s guide all but tells applicants and employees to call a lawyer:

Some employers check into your background before deciding whether to hire you or keep you on the job. When they do a background check, you have legal rights under federal law. Depending on where you live, your city or state may offer additional protections. It’s important to know whom to contact if you think an employer has broken the law related to background checks, and an equally good idea to check with someone who knows the laws where you live.

I say again, if you have not updated your background check procedures, maybe it’s time.

When Did You Last Update Your Background Check Materials?  Maybe It’s Time.

Dollar General just agreed to pay $4 million to settle a class action background check case based on its alleged violations of the Fair Credit Reporting Act (FCRA). Marcum v. Dolgencorp, Inc., Civil Action No. 3:12cv108 (E.D.Va.). That’s right—$4 million for a FCRA case.

As you know, FCRA requires employers in the United States who use pre-employment background checks on candidates to:

  1. notify the candidate that you are going to do the background check and get his or her written permission before you do the background check, and
  2. notify the candidate that you are considering taking adverse action AND give the candidate a copy of the report and a statement of his or her rights under FCRA, before you make an adverse decision based on a background check.

15 U.S.C. Section 1681b(b)(2) and (3).  The Consumer Financial Protection Bureau (CFPB) issues a Summary of Rights form that most employers use for this second notice.

In this case, the plaintiffs alleged that Dollar General failed to give them notice of the adverse employment action before it was made (or at least not enough notice) OR provided an outdated Summary of Rights. Dollar General denied all of these allegations but has agreed to settle the matter.

If you are conducting background checks, make sure you are sending sufficient notice to candidates before you make a decision. How much notice is sufficient? There is no bright line but some guidance suggests five days. Given that the purpose of the notice is to give a candidate a chance to check his or her report and let you know that it is inaccurate, five to seven business days is probably a good rule of thumb. Also, go ahead and make sure you have the latest version of the Summary of Rights from the CFPB’s website.