Employers using third party vendors to conduct background checks on existing or prospective employees must comply with requirements contained in the Fair Credit Reporting Act (FCRA).
Employers must (1) make a clear and accurate written disclosure to the employee/applicant of its intent to obtain the report, (2) obtain express authorization from the employee/applicant, (3) give the employee/applicant notice if it intends to take any adverse action based on what's in the report, (4) provide the employee/applicant a written notice after taking adverse action, and, in some cases, (5) provide employees/applicants with a document entitled "A Summary of Your Rights Under the Fair Credit Reporting Act."
Recent cases have underscored a willingness of the judiciary to require employers to comply with these requirements. In Singleton v. Domino's Pizza, Inc. (8:11-cv-01823-DKC), the U.S. District Court for the District of Maryland refused to dismiss a class action in which the pizza chain allegedly failed in various manners to comply with the requirements of the FCRA.
Employees affected by its employers' violations may bring a class action even if they are unable to prove actual damages. Recoverable damages include up to $1,000 per violation, reasonable attorney fees and litigation costs.