A luxury fashion company recently faced a class action lawsuit over compliance failures. According to the suit, the company failed to comply with the Fair Credit Reporting Act (FCRA). This failure occurred when the company did not provide job applicants with compliant notices and a copy of their consumer report before taking adverse action.
The issue began when the plaintiff attempted to transfer from one of the defendant’s California locations to an Arizona location. However, her request to become a manager at the new site ended with a denial. According to the lawsuit, the company took this action after receiving a standardized background check from a third party.
Allegedly, the employers performed these background checks for all hires, transfers, and promotions. The individuals then received scores based on criteria provided by the employers. This score determined an applicant’s eligibility for employment.
The lawsuit claims that the background check reported that the plaintiff possessed criminal records. It also provided several genders, dates of birth, and other personally identifying information that did not belong to the plaintiff. Furthermore, the listed criminal history did not belong to the plaintiff. The check reported she had convictions for driving under the influence, driving with a suspended license, possessing drug paraphernalia, and theft.
Based on this information, the filing claimed that the third-party vendor indicated the plaintiff has ineligible for hire. As a result, the company informed the plaintiff that it terminated her employment based on this background check report. However, the suit revealed that the company did not follow the FCRA’s requirements when taking adverse action based on background checks.
For example, the FCRA requires employers to provide a notice of intent, a copy of the background report, and their rights under the FCRA when they intend to take adverse action. This process allows the applicant to review the information and file a dispute if any inaccuracies exist. However, the lawsuit claims she did not receive the notice, copy of her report, or a statement of her FCRA rights until days after the adverse action. As a result, the plaintiff could not dispute the inaccuracies and discuss the report before her termination.
The lawsuit seeks to represent any candidates for new or continued employment, promotion, or transfers with individuals subjected to a report from the provider and denied employment since February 17th, 2021. As the claims in this suit illustrate, FCRA compliance is critical for all employment decisions. A crucial step employers should take to ensure compliance is partnering with a trustworthy background check company. The right provider will use their experience to provide accurate and timely reports.
Pre-employ offers resources to help employers stay compliant and incorporate fair chance hiring practices. Download our free resource guide on 5 Tips To Avoid FCRA Non-Compliance to learn more.
