Employers Face Challenges with FCRA Lawsuits on the Rise.

FCRA lawsuits have steadily risen each year for the past decade. In 2009, less than 1500 cases were filed against employers and/or CRA’s. Last year, over 4000 cases were filed prior to the end of last year. Due to their overall “sweeping” nature, many larger companies use in the processes with less individual care, FCRA claims have been Class Action lawsuits due to violations or technical or poor procedural compliance.

According to the SHRM, lawsuits have on average increased by 8.7 percent year to year. Some believe this is due to the general public’s increased awareness of their right to privacy and their larger understanding of the stakes such crucial information holds.

Preventing Legal Action
There are two main courses of action an employer can take before proceeding with the background check. An employer should make sure to properly prepare a disclosure and authorization form for the potential employee to understand and sign. This disclosure must be “stand-alone” in that it is only intended for the background screening itself and should include any other agreements.

The employer should also understand and enact the proper course of action when deciding not to follow through with an employment decision based on the results of the background check. The Pre-Adverse Action notice, along with a copy of the background report and summary of rights should be provided to the applicant immediately after the employer makes that decision. The applicant will have 5 days to respond and follow up with the Consumer Reporting Agency who provided the information to dispute any of the results. Some courts and states give the applicant 10 days to respond. The Consumer Reporting Agency will have 30 days to investigate the accuracy of the information contested.

If the applicant makes no attempt to correct or update the information, the employer is required to send an Adverse Action Notice to the applicant. This notice should include a statement that explains why the applicant is not hired, the consumer reporting agency’s contact information, a summary of the applicant’s rights to contest the information, a notice of the right to request another report, as well as a statement that the consumer reporting agency had no hand in making the employment decision.

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