Employers across the country should dust off their background check policies and forms and be mindful of recent developments related to the federal Fair Credit Reporting Act (FCRA).
FCRA mandates specific, technical steps for employers using consumer reports to make employment decisions, including hiring, retention, promotion or reassignment. While many employers are familiar with the importance of following FCRA requirements, actual compliance with the law can be tedious and challenging. As the law continues to evolve, employers should be aware of recent updates to the model federal form for consumer rights and recent guidance from a California federal court related to the “stand-alone” disclosure and authorization requirement. READ MORE
On May 16, 2016, the U.S. Supreme Court issued an opinion in the closely watched case Spokeo, Inc. v. Thomas Robins et al., addressing the issue of standing under the Fair Credit Reporting Act (FCRA). The Court held that in order to establish standing to sue, plaintiffs must show “an invasion of a legally protected interest” that is both “particularized and concrete.” In doing so, the Court vacated the Ninth Circuit’s prior holding that a consumer has standing under Article III to bring an action for statutory violations without alleging actual injury. See Spokeo Inc. v. Thomas Robins et al., case number 13-1339.
Spokeo operates a “people search engine” that provides information on contact data, marital status, age, occupation, and wealth level. In June 2013, the Federal Trade Commission (FTC) fined Spokeo for selling consumer profiles to potential employers without fulfilling its reporting obligations under the FCRA. The FTC’s pursuit of Spokeo, a non-traditional consumer reporting agency (CRA), signaled a more expansive application of FCRA provisions at that time, and set the groundwork for a civil action on related claims.
Thomas Robins subsequently brought action against Spokeo, alleging “willful violations” of the FCRA, which he claimed resulted in publication of inaccurate information about his job and wealth level that caused him psychological harm while struggling to find work. The district court dismissed the case, finding that Robins had failed to plead an injury-in-fact that could be traced to Spokeo. In February 2014, the Ninth Circuit reversed, holding that a showing of actual harm is not required for willful FCRA violations and that the suit could go forward under Article III without alleging actual injury.
The federal Fair Credit Reporting Act (FCRA) has recently spawned an unprecedented number of class action complaints against employers for allegedly failing to comply with FCRA’s hyper-technical disclosure and consent requirements before conducting background checks or proceeding with “adverse actions.” As these cases have evolved, plaintiffs have expanded their focus beyond traditional background checks and have started attacking employers’ use of ever-evolving technologies, like social media accounts, that are often accessible and searchable through just a few clicks of a mouse.
Last week, a plaintiff sued the creator and the operator of the Esteem criminal background database—LexisNexis and First Advantage—alleging that they gave prohibited information to potential employers, which ultimately barred him from getting a job. Tsang v. LexisNexis Risk Solutions, Inc., No. CV-14-0493 (N.D. Cal. Jan. 31, 2014). READ MORE