Another Employer Settles Multi-Million-Dollar Class-Action Lawsuit for Improper FCRA Disclosure

By Michael Klazema on 11/26/2014

In October, a major supermarket chain agreed to pay $6.8 million to settle a putative class-action lawsuit alleging that it failed to properly disclose that it would perform background checks on more than 90,000 applicants. Each class member is expected to receive approximately $75.

Plaintiffs alleged that including a liability waiver in a disclosure form violated Section 604(b)(2)(A)of the Fair Credit Reporting Act, which requires that a disclosure consist "solely" of the disclosure that a consumer report may be obtained for employment purposes. The plaintiff pointed to the court’s opinion in another class action - Singleton v. Dominos – and long-standing guidance from the Federal Trade Commission stating that including the disclosure in a job application or including a release of liability in the disclosure are FCRA violations.

Employers who fail to provide applicants with a disclosure – consisting solely of the disclosure that it may obtain a consumer report for employment purposes – before obtaining a background check report on the applicant, face a real and substantial risk of incurring multi-million-dollar legal liabilities. We have reported on similar cases previously:

As we reported, plaintiffs’ lawyers are targeting employers in class actions based on violations of the technical provisions of the Fair Credit Reporting Act. These lawsuits do not necessarily allege that the employer’s decision violated the FCRA, but that the process around the employer obtaining and using the background check did. Scores of employers now face or have already settled lawsuits alleging the employer’s failure to provide a disclosure that complies with FCRA § 604(b)(2)(A). Nearly 30 new FCRA-class-action lawsuits have been filed against employers in 2014 alone.

The liability risk is substantial. In two other cases, both involving a liability waiver in the disclosure form, plaintiffs extracted even higher per person settlements. In Singleton v. Dominos, No. 11-1823, 2012 WL 245965 (D. Md. Jan. 25, 2012) the parties settled a class of 11,000 applicants for between $200 and $250 each. In Reardon v. ClosetMaid Corp., 2013 U.S. Dist. LEXIS 169821 (W.D. Pa. Dec. 2, 2013), the settlement awarded was $400 each.

To avoid expensive class actions like this one, employers (1) should not include any extraneous language in the FCRA-required disclosure, including liability waivers; (2) should not include FCRA-required disclosures in the same document or online screen as the general employment application; and (3) should put the disclosure on to a separate piece of paper from the authorization.

Tag Cloud
Recent Posts

Latest News

  • July 17 — Hourly Employee Screening: What Makes It Unique and Important infographic?Modern employers conduct background checks on most of the people they hire. These checks are most often used to screen full-time salaried workers. Part-timers and hourly employees are typically less likely to face a thorough background check or even go through a background screening at all. According to a survey conducted by, 67 percent of employers screen all of their part-time employees, compared to 83 percent of their full-time employees.
  • July 17 A Kentucky school district recently decided to stop paying for volunteer background checks. Going forward, volunteers will be expected to cover the cost of their own checks, which is $10 per person.
  • July 12 Seeking fresh employees for businesses, some states seek to reduce the number of people denied employment based on old or nonviolent crimes.
  • July 11 Multinational aerospace company - Safran Group - trusts to screen new hires, The products they manufacture can have major implications for aircraft safety and worldwide security. As such, the company needs to be extremely careful and deliberate about who it trusts to join the organization.
  • July 11 Recently cited for driving too fast? Here’s what a speeding ticket will do to your background check report.
  • July 10

    Could your business be vulnerable to employee theft? Protect yourself with more thorough background checks.

  • July 09 While Social Security Numbers aren’t required for criminal history checks, they can be beneficial. Here’s why.
  • July 05

    In June, Chicago Public Schools came under fire after a Chicago Tribune piece accused the district of not protecting students from sexual abusers. The district has announced plans to run background checks on all employees.

  • July 04 — How important are volunteer background checks? Do they even matter?
    Organizations that rely in part on volunteer labor consistently find themselves asking these questions. The assumption is usually that volunteer background checks are less important than background checks for full-time or part-time employees. According to a CareerBuilder survey from 2016, 72 percent of employers conduct background checks on all employees. A parallel statistic isn’t even available for volunteer checks. They are less common – and less valued.
  • July 03 #MeToo harassment allegations continue to reshape workplaces in every industry. As a result, many companies are looking to safeguard themselves from liability.