FCRA Violations Alleged in Employee Background Checks

This article is not legal advice or medical advice. It is presented for informational purposes only.

A recent class action lawsuit filed in Texas involves allegations of FCRA violations on part of the defendant.

Lead plaintiff Jimmy W. claims that he and others were denied employment by defendant Texas Health Resources based on information that came up in background checks.

Employer background checks may involve FCRA violations according to a number of current and pending class action lawsuits. While it legal and not uncommon for employers to perform background checks on current and prospective employees, they are obligated to follow specific rules under the federal Fair Credit Reporting Act.

Plaintiffs claim that employers failed to follow these procedures. In a number of cases, the courts have ordered these companies to pay out substantial settlements for FCRA violations.

Facts of the Case

According to the complaint, Jimmy applied for a job at the defendant company and was made an offer of employment contingent on the results of a standard background check. The background check included a consumer report that allegedly contained negative information about Jimmy. Based on that information, his application was suspended and he was not hired.

Jimmy states that he was not provided with a document summarizing his rights, nor was he given an opportunity to see and respond to the negative information before the company withdrew its offer of employment.

About the FCRA

The Fair Credit Reporting Act was passed by Congress and signed into law by President Richard Nixon in October 1970. The purpose is to insure that records kept by consumer reporting agencies are accurate and fair, and that privacy rights are respected.

Under the FCRA, a person has the right to:

• be informed if information in their file has been used against them
• know what information is recorded
• request a credit score
• dispute incomplete or inaccurate information
• the deletion of inaccurate, incomplete or unverifiable information

In addition, consumer reporting agencies may not report negative information over 7 years old (10 years in the case of bankruptcies). Furthermore, the law requires that a person must give explicit consent before a reporting agency can legally release information to a third party.

This is where employers have allegedly committed FCRA violations. Under these statutes, an employer must get written permission from an applicant before obtaining a background check. The candidate must also be notified of how that information will be used in making a hiring decision.

Legally, this information must be provided in a separate, standalone document – it cannot be buried in fine print within a job application. The employer must also give advance notice before taking action based on information in a candidate’s credit report.

The reason is that the applicant must be given an answer to respond and challenge any inaccurate information.

Penalties For FCRA Violations

FCRA violations are considered to be a civil matter; there are no criminal penalties involved. However, if a consumer believe that their rights under the law have been violated, they can file a legal complaint and sue for actual or statutory damages as well as legal fees and court costs.

Section 1681n of the FCRA also provides for punitive damages if the preponderance of evidence shows that the violation in question was willful.

What To Do if Your Rights Under the FCRA are Violated

If you do decide that legal action against the violator(s) is warranted, be aware that there is a finite amount of time within you must file your lawsuit, or forever forfeit your right to do so. The statute of limitations limits claims to within two years of the violation being discovered, or five years after the violation occurred, whichever is sooner.

The Background Check FCRA Class Action Lawsuit is Case No. 4:19-cv-158, U.S. District Court, Northern District of Texas.

Join a Free Employee Background Check Class Action Lawsuit Investigation

If a company performed a background check on you as part of the pre-employment process in the last 5 years, an experienced employment attorney can help you determine if the employer complied with federal rules during that process.

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