Lyft Class Action Says Driver Background Checks Violate FCRA

Lyft faces a putative class action lawsuit alleging the driving service violates the Fair Credit Reporting Act by using background checks to make adverse employment decisions, and not giving job applicants a copy of the report.

Lead plaintiff Pete Peterson claims that Lyft refused to hire him on two separate occasions, once in 2014 and again in 2015, after receiving a negative background screen from Sterling Infosystems Inc.

The plaintiff argues in his class action that Lyft failed to provide notice of the credit report prior to taking adverse employment action, as required by the FCRA.

According to the class action lawsuit, Lyft uses Sterling to obtain standard background screens on its applicants. The plaintiff alleges that Sterling found he was not eligible for employment at Lyft based on that screening.

“In violation of the FCRA, Lyft failed to comply with the FCRA’s mandatory pre-adverse action notification requirement, and failed to provide a copy of the background report it obtained from Sterling along with a summary of rights, before talking adverse action, as required by [the FCRA],” argues the plaintiff in his complaint.

“Every year, individuals who have applied to Lyft for employment have been similarly aggrieved by the same violation,” continues the class action complaint.

According to the lawsuit, “Sterling sells consumer reports to potential employers (such as Lyft) wishing to investigate the criminal record history, or lack thereof, with regard to various job applicants or employees. This service is attractive to Sterling’s customers such as Lyft who are constantly hiring in very large volumes because it provides customers with a remote, outsourced tool to make its employment decisions rapidly.”

“Under the FCRA, any ‘person’ using a consumer report, such as Lyft, who intends to take an ‘adverse action’ on a job application ‘based in whole or in part’ on information obtained from the consumer report must provide notice of that fact to the consumer-applicant, and must include with the notice a copy of the consumer report and a notice of the consumer’s dispute rights under the FCRA, before taking the adverse action,” Peterson states.

The plaintiff alleges that he attempted to obtain a job as a Lyft driver in 2014 and again in 2015. According to the class action complaint, after applying in late 2014, Lyft let the plaintiff know that he would not be hired, but did not tell him that decision was based on the background screen conducted by Sterling.

In late 2015, when the plaintiff applied to work as a driver with Lyft again, he alleges that a Lyft representative asked for information to link back to his 2014 application including his Sterling background screen.

According to the complaint, “[t]hat same day, a representative from Lyft communicated with Plaintiff advising Plaintiff that Lyft uses Sterling to conduct background checks on potential employees, and that Plaintiff should contact Sterling directly ‘to dispute the charges’ on his profile that made him ineligible for employment.”

The plaintiff alleges that the Sterling background screen indicated that there was some county criminal action to “consider,” and this caused Lyft to deny his job application.

“The negative adjudication of Plaintiff’s application occurred prior to Plaintiff being notified in writing of that fact and prior to Plaintiff being provided with a copy of the report or any meaningful opportunity to dispute it, not once, but on two separate occasions,” argues the plaintiff. “In fact, Lyft never sent to Plaintiff a copy of the Sterling background report used in its hiring process or a summary of rights under the FCRA, as required by FCRA.”

“As a direct result of Lyft’s unlawful adoption and use of the Sterling consumer report along with Sterling’s adjudication of Plaintiff’s employment application, Plaintiff lost the job opportunity at Lyft, and was provided no meaningful opportunity to be made aware of what information was being reported about him as well as by whom information was being disseminated by, which could continue to affect future employment endeavors pursued by Plaintiff,” alleges the plaintiff in his class action lawsuit.

The plaintiff seeks to represent a nationwide Class of job applicants with Lyft who were subject to adverse employment decisions based on their background screening. The plaintiff seeks monetary relief on behalf of himself and potential Class Members.

The plaintiff is represented by Michael Reese of Reese LLP, Melissa Wolchansky of Halunen Law, and James A. Francis and John Soumilas of Francis & Mailman PC.

The Lyft Driver Background Check Class Action Lawsuit is Pete Peterson v. Lyft Inc., Case No. 3:16-cv-07343, in the U.S. District Court Northern District of California.