Publix Super Markets Inc. is paying big time for violating the Fair Credit Reporting Act (FCRA) with its background check policy. It was recently announced that the company would pay $6.8 million to settle a class-action lawsuit, filed over the FCRA oversights. The class action suit alleged that Publix had failed to properly disclose plans to run background checks on job applicants. The FCRA has very strict rules about background check disclosure and authorization, and according to the lead plaintiff in the Publix class action suit, the company did not follow those rules properly.
This particular case is a confusing one: the plaintiff admitted that Publix had asked her to authorize a background check. However, she said that the way in which Publix offered this disclosure blatantly violated the FCRA's rules for how such disclosures are supposed to be given. Based on FCRA rules, businesses have to offer a background check disclosure as a standalone document. Publix, evidently, included the authorization as a more general part of its job application.
The argument here is that background check disclosures, if not provided as a standalone document, can be confusing to applicants. The Publix lawsuit, for instance, claimed that the way in which the super market chain offered the background check disclosure made it difficult for applicants to control and correct the information that is being disseminated about them by third parties. In other words, this particular lawsuit is a matter of wording and clarity, and not one about actual wrongdoing. Evidently, Publix still ran the background checks that they said they would, and still obeyed with the other rules laid forth by the FCRA. The lawsuit did not, for instance, include any complaint about Publix failing to provide rejected applicants with a copy of their background check report, another item mandated by the FCRA.
Lawsuits like this one, filed in accordance with the FCRA, have become more and more common in recent years, and they're frustrating to say the least. And Publix was certainly frustrated in this situation. The grocery store chain has maintained its innocence all along, but has opted to pay a class action settlement $6.8 million, to be exact, because doing so is less costly than courtroom litigation. Publix is also looking to minimize disruptions to its business operations by ducking out of the courtroom war.
The plaintiffs, meanwhile, get a whole lot of nothing for their trouble. The $6.8 million must be divided among the 90,633 people who were supposedly impacted by the FCRA breach. Even if there were no legal fees to consider, each person would only get about $75. After lawyer's fees, each class member will reportedly receive closer to $48.
So the question is this: who do these big FCRA lawsuits help? An argument could be made in some cases that they catch companies who are improperly running background checks, or who are failing to offer appropriate disclosure of those background checks to applicants. In this case, though, those arguments seem thin. Publix has made edits to its application to avoid similar issues in the future, but the differences between the old method of background check disclosure and the new one will probably be minimal or entirely negligible for applicants.
The winners here, of course, are the lawyers, a realization that won't be much of a surprise to anyone who has paid attention to class action lawsuits over the years. It's just unfortunate that the FCRA, a document meant to protect employee rights, is just creating frivolous lawsuits that hurt the economy and the businesses that are a part of it. Unfortunately, that's the way things are right now, and businesses need to continue being vigilant about following the FCRA to the very last letter. As evidenced by the Publix case, one step out of line can result in a costly legal battle.
About Michael Klazema The author
Michael Klazema is Chief Marketing Technologist at EY-VODW.com and has over two decades of experience in digital consulting, online product management, and technology innovation. He is the lead author and editor for Dallas-based backgroundchecks.com with a focus on human resource and employment screening developments.