Failure To Disclose Background Checks

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Failure To Disclose Background Checks

Consent to a background check has become an integral part of any employment application process nowadays regardless of whether it is in a large company or a small company. These background checks protect employers and they are also useful in verifying the honesty of potential employees about their educational achievements and past employment. It also helps verify any employees that are risky with regards to theft or workplace violence.

Courts have however, experienced a different litigation wave over the sufficiency of the employer’s disclosure of the background check and the potential employee’s consent thereof.

The Fair Credit Reporting Act(FCRA) states that an employer’s intention to get a background check must be disclosed in a separate document. An employer cannot get or cause a consumer report to be procured, for any employment reasons about any customer, unless:

  • A distinct and conspicuous disclosure must be written to the consumer at any time prior to the report being procured, in a document hat is only the disclosure, that a consumer report must be done before the employment purposes; and
  • The consumer has confirmed the procurement of the report in writing by that person.

In the case of re Michaels Stores Inc – The FCRA disclosure requirement is defined as the “stand-alone disclosure requirement” and it is subject to several recent opinions. One of those recent opinions is Vera v Mondelez Global LLC in which the Plaintiff had applied for a job with Mondelez, who is an international manufacturer of food marketed under different names. During the application prices the website displayed statements relating to the general topic of background checks. Vera had been asked to scroll down the webpage to read the full statement. In the statement, there was a provision that dealt with a background check and included an authorization for “all companies, credit agencies, educational institution, persons, government agencies, criminal and civil courts, etc. to release said information that had about the Plaintiff and release it to them from any liability for this act.

In Vera’s lawsuit against Mondelez, Vera didn’t allege that the statement failed to inform Vera of the fact that a background check as a part of his application nor that Vera had denied Mondelez permission to conclude the background check. Vera believed that the Statement was in violation of FCRA’s “stand-alone disclosure requirement” as it contained way more information than just a disclosure that Mondelez intended to get a consumer report about Vera.

Mendez argued that the court lacked jurisdiction due to Vera’s lack to allege an injury-in fact. The court relied on US Supreme Court Opinion in Spokeo, Inc v Robins, 136 in its decision. The Spokeo case involved a FCRA provision that obligated consumer report agencies to adhere to procedures when collecting and or reporting background and credit information about any individuals. The court in this case highlighted the importance of decreasing the risk of accepting false information. It further noted that an agency’s failure in following procedures may result in no harm to the consumer if the information was correct.

In the Vera case the Plaintiff never alleged that he had been deprived of any information to any information he had been entitled to FCRA. The plaintiff had also failed to allege that the receipt of information implicated a fundamental right. It was further noted by the court that to the extent the FCRA established the privacy right protections that imply a fundamental right, and this was not evident in this case as Vera had consented to the background check. The court further concluded that failure to comply with procedure might cause the statutorily identified ham like inaccurate reporting however a procedural violation won’t necessarily cause harm, so the procedural violation y itself isn’t an injury in fact.

The Vera opinion is however not an isolated opinion and there are several courts that have analysed whether harm is presumed from a violation of the “stand-alone disclosure requirement” is procedural in nature and it is not substantive. An Applicant must therefore show harm from violation of this statute.

Employers are advised to be cautious and ensure that their application documents meet the requirements under FCRA. Even though any lawsuit can result from the company’s failure to comply can likely be dismissed, it is also costly and time consuming to successfully defend against any potential class action complain that alleges the violation of the “stand-alone disclosure requirement”. For background screening contact United Screening.


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