Wave of recent class action lawsuits highlights requirements of employer background checks and violations of the Fair Credit Reporting Act (FCRA)

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.