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In recent months, a number of class action lawsuits have been filed against major companies, alleging they have violated the Fair Credit Reporting Act (FCRA). The two most common complaints cited include:

  1. Disclosure forms that are not “stand alone” documents, and
  2. Improper adverse action procedures.

Recently, Pizza Hut became the latest major employer to have an FCRA class action lawsuit filed against it. The case was filed in the Southern District of New York, and the plaintiff alleges that the company included a release of liability into its disclosure form, thereby violating the FCRA by adding “extraneous” information on the release.

The Pizza Hut lawsuit is just one of many recent FCRA class action lawsuits and settlements and you may be asking why so many cases are springing up? The most common reasons are that lawyers have found these types of lawsuits to be “class action friendly,” with the opportunity for large settlements. And the large settlements – some in the millions of dollars, such as the Publix Supermarket settlement for $6.8 million – have made for major headlines that have caught the public’s attention.

As an employer, what can you do to reduce the chance of this type of lawsuit? Corporate Screening has some suggestions:

  1. Review your disclosure forms. Do they contain additional “extraneous” information?
  2. Review your adverse action procedures, including the documents. Prior to taking adverse action, employers are required to provide pre-adverse action notice (including a copy of the consumer background report, a copy of the Summary of Rights under the FCRA, and any required state-specific notices. And after taking pre-adverse action, employers must allow a reasonable amount of time (generally 5 business days) for candidates to request reinvestigation or otherwise respond to the information contained in the report prior to taking adverse action.
  3. Corporate Screening can help you assess your background screening program. We offer a complimentary Screening Assessment Program (SPA) that can help your organization measure your background program against industry standards, best practices and legal compliance. This assessment will provide you with a complete understanding of your current background program, and can help you design and implement a compliant program that will help you mitigate the risks associated with non-compliance.

Corporate Screening also has sample authorization and disclosure forms, as well as pre-adverse action and adverse action letters that employers can access. These are available in the Resource section of EASE. We also offer our Adverse Action Workflow Tool, which automates and tracks the adverse action process in EASE.

For more information about SPA, the Adverse Action Workflow Tool or if you have any questions about whether or not your program is in compliance, please Contact Corporate Screening at 800-229-8606.