Plaintiff's law firms are suing large employers for technical violations of the disclosure requirements of the FCRA. At the beginning of the summer, we noted a class action where a plaintiff class asserted that the inclusion of the FCRA disclosure in the job application entitled the class to statutory damages of $670,000 to $6,700,000. Shortly after that, we noted a case where a company had settled a claim that the FCRA disclosure was invalid because it was not separate for $1,200,000.
We now see that a plaintiff's firm has filed class action cases against a major pizza chain and a major bank. In the pizza chain case, the plaintiff alleges that the disclosure is invalid because the disclosure form included a release of liability. In the bank case, the plaintiff alleges that the bank included its FCRA disclosure in a document covering all of the terms and conditions of employment and which contained a release of liability, instead of having the disclosure in a separate document, as the FCRA requires.
This type of claim appears to be the plaintiffs firms' favorite type of claim right now, because it is simple to prove and opens up the possibility of statutory damages ($100 to $1,000 per defective disclosure), uncapped punitive damages, and attorney's fees.
Employers should immediately review their disclosure and authorization documents and, if unsure about their compliance, put the disclosure in a separate document. Employers should ensure that their FCRA disclosures do not include a release of liability. Even if employers are certain that their forms comply with the FCRA, putting the disclosure in a separate document makes the employer a more difficult target for a class action. The evolving best practice is therefore to separate the disclosure from everything else.
About Michael Klazema The author
Michael Klazema is the lead author and editor for Dallas-based backgroundchecks.com with a focus on human resource and employment screening developments