Employers are getting tripped up by a little-known law related to background checks, and it’s costing some of them serious time and money. While the general public likely knows little about the FCRA, employers like Whole Foods, Dollar General, and Publix Super Markets are becoming intimately familiar with the law because they are getting sued over it.

Recently, Michaels Stores was slapped with a class action lawsuit in Missouri federal court that accused the craft store chain of violating the Fair Credit Reporting Act. Michaels is accused of breaking the law because it failed to properly disclose that a candidate’s consumer report might be obtained during the hiring process.

While the general public likely knows little about the FCRA, employers like Whole Foods, Dollar General, and Publix Super Markets are becoming intimately familiar with the law because—like Michaels—they are getting sued over it.

So, what are employers being sued for?

Technicalities, mostly. Before running a background check on an applicant, according to the FCRA, an employer has to give notice and ask for authorization in a way that’s “clear and conspicuous” so it stands out from the rest of a job application. Employers keep fumbling over that step. “They think, ‘Oh by the way, we’re an at-will employer, so we’ll just include that alongside the consent form. Aren’t we being good?’ No, actually, you just violated the law,”  “Or their application is online and it’s one big steady stream of information.” That too, is illegal.

Retailers and restaurants seem to be favorite targets since their frequent hiring increases the potential pool of job applicants subjected to potentially illegal background checks.

In March of 2014, a class action lawsuit demanding $10 million filed in California accused Whole Foods of failing to provide applicants with a standalone disclosure form. (The court dismissed the case in October 2014.) Chuck E. Cheese was hit with a similar lawsuit in California in March (the case is ongoing). Panera was accused of the same violation in Florida in July, though the case has since been dismissed. That same month, current employees and job applicants sued Century 21 Department Stores in an ongoing case for running background checks without first obtaining their permission.

While retailers seem particularly susceptible they’re not the only ones getting sued.  Paramount Pictures was slapped with a lawsuit for procuring a consumer report during the job search process without issuing a separate disclosure.

 

In October, Dollar General agreed to pay $4 million to settle claims that it didn’t properly notify more than 200,000 job applicants of background checks. Earlier last year, grocery chain Publix agreed to pay $6.8 million to settle claims that it violated the FCRA. In Publix’s case, the company was sued for burying the disclosure form alongside other application materials. In these cases, legal nitpicking paid off.

 

The companies sighted above are large, economically healthy corporations who can feasibly absorb a lawsuit of this size. Unfortunately, a lawsuit of any size can be devastating to a smaller, less financially stable business. Whether these companies are outsourcing their background checks or are handling them in house, shame on them for not knowing the FCRA guidelines. There is no excuse. Rapid Results Background Checks Solutions will keep your company FCRA compliant by developing personalized FCRA compliant forms such as a Disclosure & Authorization, Pre Adverse & Adverse Action letters. Contact us today @800-472-5202 and visit our website @ rrbgs.com