The Importance of Using an Accredited Background Screening Company: Jones vs. Waffle House

WAFFLEHOUSE_Logo_5x3A Florida judge recently permitted a class action lawsuit against Waffle House for non-compliant criminal background checks to move forward.

Plaintiff William Jones filed a class action lawsuit against Waffle House in October 2015. Despite having worked for Waffle House “without issue” for more than 20 years, he claims the company denied him a job that he reapplied for based on the results of a background check that showed he had a criminal history.

Jones says Waffle House never notified him that it intended to deny his job application and never provided him with a copy of the background check.

The plaintiff alleges that Waffle House denied applicants for employment based on background checks the company acquired from The Source for Public Data LP, also named as a defendant in the class action lawsuit.

According to the class action lawsuit, Public Data claims it is not a consumer reporting agency but instead just an aggregator of public records. As such, Jones says, the company places the burden on those subject to its reports to correct any errant data at the source. “Public Data does not recognize any duty under the FCRA to correct the data itself,” Jones says.

Waffle House filed an appeal to dismiss the proposed FCRA class action against the company, which was subsequently denied by the judge. On August, 2016, Waffle House announced that it will appeal the judge’s decision. The judge rejected Waffle House’s claims that they had “no recollection or record” of using Public Data to perform a background check.

In its notice of appeal, Waffle House argues that the Plaintiff signed an arbitration agreement when applying for the job and requested that the judge compel arbitration. Following the judge’s refusal to dismiss the lawsuit, Waffle House announced that it would seek an appeal to the Eleventh Circuit, citing failures of the Florida court to follow the Federal Arbitration Act.

The above issue is a prime example of why employers should engage the services of an accredited, qualified and experienced consumer reporting agency that provides background screening services.  It is especially important to use a CRA that uses only official sources of data and confirms all information from online databases with the courts.



William G. Jones v. Waffle House Inc. et al., case number 6:15-cv-01637, in the U.S. District Court for the Middle District of Florida, Orlando Division

DID YOU KNOW? CARCO Has Technology Driven Solutions

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CARCO’s Technology Driven Solutions provide:

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  • Technology that allows for multiple client roles and multiple automated and customizable applicant workflows
  • Proactive email reminders
  • Experience at integrating with multiple ATS systems
  • Automated EEOC compliance
  • CARCO Analytics Reporting Tool (CART)
  • I-9/E-verify

For more information on CARCO’s Technology Driven Solutions, visit or call 866-557-5984 to speak to a CARCO Specialist.


Four Questions to Ask When Using Employment Credit Reports in Hiring

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Most people who use employment credit reports consider the method of payment information, the amount of debt, and the presence of bankruptcies, liens and civil cases to be most enlightening, and use that information to deny employment. But are they correct in so doing? Is that approach defensible? Whether you are looking at a credit report, criminal history, or any other background information containing potentially adverse  information,  when  evaluating  the  past  behavior  of  a  prospective  or current employee to determine suitability for a specific job, you must answer these four questions:

  1. Is it job-related?
  2. Is it current enough to be relevant?
  3. Is it severe enough to be significant considering the time elapsed since it occurred?
  4. Is the report accurate – is it likely that the applicant did (or did not) do it?

The question of job relatedness is the most difficult question to address. For what job is it critical to know that an applicant’s national credit card and local Joe’s Tires accounts are paid promptly every month? Under what circumstances should we consider the judgment in favor of the roofing contractor or hospital in making an employment suitability decision? Some would argue that a poor credit report, or many high credit lines, is a clear indication of a serious risk to their company because that is the best evidence that the subject is at least irresponsible, and probably dishonest. Following this logic, we know that all financially stable folks are always honest and trustworthy, while all poor and financially struggling people are naturally dishonest and untrustworthy.  Right? Of course not.

Is there an answer to the question of job relatedness? Unfortunately, not a clear one although many of the laws referenced in the resources do carve out circumstances, or in some cases positions, for which a credit report may be requested. Note that merely having a law that may permit the use of credit reports does not relieve the employer of the ultimate responsibility to be able to demonstrate job relevance if challenged. Most of the guidance from litigation has come in the form of what is not job related. If you are filling a warehouse position, credit worthiness is not a bona fide occupational qualification. When hiring an individual with clear fiduciary responsibility, like a counter in a money room, it may be appropriate… unless you are hiring in New York City! (Review the New York City Stop Credit Discrimination in Employment Act to learn more).

Do not forget the credit report does not investigate how the information reported came to pass. The raw data provided only pulls the curtain back slightly. The employer has an obligation, in determining job relevance, currency, and accuracy, to complete the research only suggested by the data reported. For example, if the applicant has “bad credit” due to a catastrophic illness in the family, should that have the same weight as someone who has bad credit due to an addiction to television shopping channels and an aversion to paying bills? Many think not and in fact there is a growing legislative movement to specifically exempt medical bills from any credit worthiness evaluation.

Recommendations to Consider

In the absence of reliable direction that is legally defensible, the bare facts in a credit report should not be allowed to disqualify any applicant. An employer has two options when using the employment credit report:

  • When the credit report contains information which, on its face, appears adverse based on job- related standards, that report should be used as the basis for a more in depth review with the candidate to probe the circumstances to determine if there are mitigating factors to explain that derogatory information and to assess whether the adverse information is relevant to the job and should be considered as a factor in the hiring, retention or promotion decision; and/or
  • Establish an annual employment credit report review, (with the appropriate FCRA consents), and review those reports for significant changes in position from year to year.

The second approach is recommended for employees with access to significant amounts of cash and other negotiable instruments, and those who can sign contracts or commit your company to outlays of significant resources, such as buyers, purchasing agents, sometimes including department heads and company officers, when permitted by law. The annual credit audit should be automatic but, again, the presence of a significant change in credit standing should only start an inquiry. It is not to be misconstrued as conclusive proof of wrongdoing.

Generally speaking, if you are not currently using employment credit reports, do not feel that you need to start. Upon close inspection, very few positions actually merit credit inquiries. The questions of integrity that some employers expect to be answered by a single credit report are often better addressed with a combination of thorough background checks, comprehensive and well communicated corporate ethics polices, with established controls and management oversight.

SoFi Settles $2.4M Class Action Over Credit Report Misrepresentation

SoFi logo      On August 9th, a California federal judge approved Social Finance, Inc.’s (SoFi) $2.4 million settlement resolving a class action lawsuit that accused the company of violating the Fair Credit Reporting Act (FCRA). The Plaintiff alleged that SoFi had consistently run “hard pull” credit inquiries on consumers’ credit scores, despite claiming to use “soft pull” inquiries, which negatively impacted consumers’ scores in the process.

The $2.4 million settlement will be divided among the 10,700 consumers whom SoFi, which specializes in student loan refinancing, ran “hard pull” inquiries on between November 2013 and August 2014.

SoFi’s Counsel argued that, “Given that there is a disagreement about whether injunctive relief is even available to private plaintiff under the FCRA, this accomplishment is remarkable, and may achieve more for class members than could have ever been achieved in litigation.” The settlement will also require SoFi to request that the consumer reporting agency retroactively reclassify its “hard pull” credit inquiries into “soft” inquiries.


Heaton v. Social Finance Inc., case number 3:14-cv-05191 in the U.S. District Court of the Northern District of California


Judge Shuts Down “Professional Plaintiff” and Dismisses Time Warner FCRA Violation Class Action Lawsuit

time-warner-cable-logo  On August 9th, 2016, a Wisconsin federal judge dismissed a proposed class action against Time Warner Cable, Inc. for allegedly violating the FCRA. The original complaint alleged that Time Warner violated the law by running credit checks on job applicants during the background screening process without their prior express consent.

However, Time Warner argued that the case should be dismissed because the Plaintiff has applied to over 562 jobs over the past two years with no intention of actually working for them and has threatened 50 of these companies with FCRA litigation, resulting in $230,000 in settlements thus far.

Time Warner’s lawyers stated that the Plaintiff, Cory Groshek, admitted during a deposition that he has applied for hundreds of jobs, hoping to initiate the background check process that could lead to an FCRA violation.

The judge ultimately ruled in Time Warner’s favor, dismissing the case because the Plaintiff was unable to demonstrate “concrete harm” in line with the Supreme Court’s ruling in Spokeo, Inc. v. Robins.

The judge also denied the Plaintiff’s motion to seal some of the case documents referencing his other lawsuits, writing that the Plaintiff, “sued the defendant on a cause of action for which he has sued a number of other companies, and yet he argues that those other suits are irrelevant to this one. In essence, he indicates that while he wants to be able to file suit against the defendant in federal court, he wants to prevent the defendant from enquiring into similar suits that he has filed against other companies for the same alleged conduct. That is not an appropriate basis for the court to seal.”



Cory Groshek v. Time Warner Cable, Inc., case number 2:15-cv-00157, in the U.S. District Court for the Eastern District of Wisconsin

Sprint Settles Background Checks Class Action

Sprint logoOn August 8, 2016, Sprint Corp agreed to an undisclosed settlement resolving allegations that the company illegally asked job applicants to waive their privacy rights.

The Plaintiff accused Sprint of using an illegal background check authorization form that gave the company permission to access his private health and educational information in violation of the Fair Credit Reporting Act (FCRA). The complaint claims that the authorization form allowed Sprint “a vast and limitless release of information.” The lawsuit sought to represent a class of all job applicants that signed the form, which has been in use since 2013.

Sprint previously attempted to dismiss the case by offering the Plaintiff the maximum penalty under the FCRA, which the plaintiff rejected. The settlement occurred before the Plaintiff was able to certify the nationwide class of job applicants.


Rodriguez Jr. v. Sprint Corp et al., case number 1:15-cv-10641, in the U.S. District Court for the Northern District of Illinois.

Massachusetts’ New Pay Equity Law is a Milestone in Closing the Gender Wage Gap

Law book   As of July 1, 2018, Massachusetts’ new pay equity law will prohibit employers from asking job applicants to disclose their wage and salary history on job applications.

According to the law, all public and private employers are prohibited from discriminating in any way on the basis of gender in the payment of wages or paying any employee a salary or wage rate less than the rates paid to their employees of a different gender for comparable work. The new law also prohibits Massachusetts employers from barring employees to discuss their salaries with each other.

According to the U.S. Census Bureau, women earn 70 cents for every dollar earned by men. By using salary history on job applications as a guideline for pay, this inequity has a tendency to follow workers throughout their professional lifetime.

Other states, such as Maryland and California, have similar legislation focused on reducing pay inequity and salary secrecy. However, according to Karim Fadel of Boston-based Unison Realty Partners, the key difference in the Massachusetts law is, “Instead of tackling the consequences of unequal pay, the Massachusetts law will focus on making equal pay for equal work the gold standard from the moment a prospective employee walks in the door.”

Companies are now required to post a minimum salary in job ads and pay any hire at least that amount. It should be noted that employers will be able to ask an applicant what he or she “hopes to earn” in the new position.  However, that practice might be open to interpretation in a court of law.

The new law lengthens the time an employee has to bring a pay discrimination suit from one to three years and allows for the awarding of attorneys’ fees. It also clarifies that analysis of “comparable” work must be based on skill, effort, responsibility and working conditions. An employer is allowed to defend itself against gender discrimination claims if the company conducts a self-evaluation of workplace job classifications and wage rates.

Wage differentials are permitted based on:

  • A seniority system,
  • A merit system,
  • A system that measures earnings by quantity or quality of production or sales,
  • Geographic locations in which a job is performed,
  • Education, training or experience to the extent such factors are reasonably related to the particular job in question, and
  • Travel, if it is a regular and necessary condition of the particular job.

The new law expands the existing groundbreaking pay equality law that was enacted in Massachusetts in 1945.

All employers should take note and prepare for this law to become an issue in their state. It is expected that many states as well as the U.S. Congress will adopt similar laws within the next two to five years.


New credit reporting changes are problematic for positions regulated under FINRA. CARCO FAST can help!

credit-report-history-300x171  According to an article by, the major credit reporting agencies are working on a big change that could bolster a lot of people’s credit scores.

As part of the National Consumer Assistance Plan, Equifax, Experian and TransUnion are planning to significantly reduce the amount of tax-lien and civil-judgment information found in consumer credit files by July 2017. The changes will enhance credit reporting accuracy and make credit information more transparent and user-friendly for consumers.

However, the changes will present a problem in vetting candidates for regulated positions under FINRA that require verification of liens, judgements and civil actions.

CARCO’s Financial Anomalies Search Technology (FAST) can help!  FAST provides compliance officers and recruiters a means to match regulated candidates self-disclosures regarding public civil records, liens or judgments in compliance with Federal, State, or local laws and regulations.  FAST is provided in a two-phase approach so users do not have to pay for research on items that are already disclosed and self-explanatory. Phase I results are provided in an unverified form that allows the user to easily compare those results against the regulated candidate’s disclosures on any applicable personal history form such as the FINRA U-4 or U-5 forms.  When the comparison between the self-disclosures and the CARCO FAST is complete, the reviewer initiates Phase II by selecting specific reported records for further research at the source to obtain accurate, complete, and up to date records matched to the candidate that are actionable.  By allowing the reviewer to identify unmatched records before perfecting those records, research time and cost do not have to be expended for those records that match and have already been disclosed by the candidate.

Regulated entities have already struggled with the limitations of credit reports. However, when this change takes place, credit reports will no longer be any part of the solution to verify liens or judgments.

CARCO FAST is a unique product offered by no other company that can be the solution!

Click here to view CARCO FAST’s Simplified Workflow Infographic.


For more information on CARCO FAST, contact a Specialist at 1-866-557-5984 or click here.