Employee applicant succesfully disputes entries on background report, but is disqualified anyway

By Michael Klazema on 2/26/2012

Eric C. Johnson v. ADP Screening and Selection Services, Inc. et al., 2011 U.S. Dist. LEXIS 18361(D. Minn. Feb. 24, 2011)

Facts:  Plaintiff claimed that Defendant employment agency Robert Half International, Inc. (“RHI”) violated the FCRA following the running of a background check on him as a prospective employment candidate. The background report stated that Plaintiff had numerous criminal convictions in Minnesota, Texas and Virginia.  RHI sent Plaintiff a letter stating that it had placed his employment application on hold as a result of the report and included a copy of it and a summary of rights under the FCRA. The notification letter further stated that Plaintiff could   dispute the information, and that Plaintiff had ten business days in which to submit a revised report to RHI if the dispute resulted in a change to his background report. Plaintiff subsequently   disputed the report. Plaintiff was informed that the investigation might take thirty days.  Soon thereafter, and before the investigation was completed, RHI sent a letter to Plaintiff stating that he had been disqualified as an employment candidate. Defendant ADP Screening and Selection Services, Inc. (“ADP”) subsequently sent letters to Plaintiff indicating that the criminal records from Texas and Virginia would be removed from his background report. ADP also informed RHI of this investigation result.  Despite this result, RHI decided not to overturn its decision to disqualify Plaintiff. Plaintiff claimed that RHI violated 15 U.S.C. § 1681b(b)(3) by disqualifying him fourteen days after it sent the required FCRA notice instead of waiting a longer period which would have been “reasonable” under the statute. Defendant RHI filed its summary judgment as to Plaintiff’s claim, claiming that the FCRA does not mandate a waiting period between the notice and subsequent adverse action. The Court agreed and granted RHI’s motion in its entirety.  
  • Pre-Adverse Action Notice Requirements.The FCRA is not an employment statute, but it imposes a duty on employers to provide prospective employees with information about their consumer reports. Thus, under 15 U.S.C. § 1681b(b)(3)(A), before a person takes an adverse employment action against a consumer based in whole or in part on a consumer report, the person intending to take such adverse action shall provide to the consumer to whom the report relates a copy of the report and a description in writing of the rights of the consumer.  
  • Adverse Action Notice Requirements.  The FCRA only requires a person intending to take adverse action to provide a copy of the consumer report and FCRA rights before taking action.  It does not mandate a waiting period between the notice and the adverse action.  Note: the Court noted that Congress's use of the word "before" shows that there must be some time between notice and action.
  • Adverse Action Notice Requirements.  Although Plaintiff argued that the time between notice and action must be a "reasonable" amount of time, and raised the point that the FCRA gave credit reporting agencies thirty days in which to investigate disputed information, the Court found that Plaintiff’s interpretation would create an unreasonable constraint on employers.  Specifically, the Court noted that if Plaintiff’s argument was to be adopted, each time an employer wanted to hire, it would be prevented from taking action if the consumer report of any applicant -- even one that it had no intention of hiring -- contained information that reduced that applicant's competitiveness. The employer would then have to place the entire process on hold and leave the position unfilled until the reporting agency had thirty days to investigate. Likewise, Defendant RHI’s interpretation rendered the term "before" meaningless, because if adopted, an employer could deliver the notice and then take adverse action within seconds.Note: The Court did not adopt either interpretation, and found that waiting 4 days (which is what took place between Plaintiff and RHI) provided Plaintiff ample opportunity to dispute the report, even under a “reasonable” standard. The Court also held that nothing in the FCRA required an employer to consider any correction that a reporting agency might make based on an investigation

About Strasburger & Price

Attorneys from Strasburger & Price, LLP involved in FCRA litigation have been monitoring and analyzing the legislative and caselaw developments related to this area of the law.  This group of lawyers will continue to follow these developments throughout the coming months to help you understand how it impacts your business as well as to help you make the necessary decisions to succeed under this ever changing area of credit reporting and employment screening/criminal and credit background check compliance.

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