Judge Rules Amazon Can’t Duck Class Action Background Check Suit

  On January 30th, A Florida federal judge denied Amazon.com’s motion to dismiss a class action by job applicants accusing the online retailer of violating the Fair Credit Reporting Act through its background check process.

Plaintiffs argued that Amazon violated the FCRA by failing to provide two separate forms for the job application and the background check authorization for employment at a Florida-based fulfillment center. It should be noted that this case is a consolidation of two separate background check litigation suits.

U.S. District Judge Lazzara agreed with the plaintiffs that the alleged failure to receive a stand-alone disclosure document is not hypothetical or uncertain, and can plausibly constitute an injury of fact. The judge found that Amazon’s actions related to the disclosure violations were willful, as a liability waiver was included with the background check policy.  He stated, “The plaintiffs have at least three kinds of harm: invasion of privacy, informational harm and risk of harm.” He added that it is possible the company did not follow the proper steps to receive approval for the checks. All of this convinced the judge that Article III standing is sufficiently established in this case.

The judge disagreed with arguments by Amazon that the applicants had no viable claim based on the Supreme Court’s decision in Spokeo v. Robins, which found that consumers must allege concrete injury instead of a technical statutory violation to establish standing.

Simply put, Plaintiffs sued alleging their background checks were unauthorized because the authorizations did not comply with the FCRA.

There’s an important lesson for employers here. Ensure your hiring process is FCRA compliant! The FCRA expressly requires employers to provide applicants with a stand-alone disclosure and authorization form prior to obtaining a background check. Unfortunately, many employers still fail to comply with this law and find themselves embroiled in costly lawsuits. This lawsuit is a reminder that employers should periodically review their hiring processes to ensure strict compliance.

To learn more about FCRA compliance, call a Cisive Specialist at 866-5575984 or click here.

Hargrett v. Amazon.com Inc.

Court Rules Using a Liability Waiver in Background Check Disclosure Forms Violates the FCRA

A subsidiary of oil field services company Schlumberger Ltd. violated the FCRA by placing a liability waiver on its job application disclosure form to force applicants to waive potential claims against the company.

On an issue of first impression, the US Court of Appeals for the Ninth Circuit said while employers must inform a job applicant that the company will perform a background check in the hiring process, the form cannot include a provision waiving the applicant’s rights to sue for any information found in the background check.

In its decision, the Ninth Circuit said the company had willfully violated the statute, opening it up to the Plaintiff’s petition for both statutory and punitive damages.

This is the first time a federal appeals court decided this issue under the FCRA, which is intended to protect employees over concerns about potential errors in consumer reports that can improperly cause applicants to lose out on jobs.

There’s an important lesson for employers here. “The court’s conclusions that an employee who wasn’t actually harmed by the form still has standing to sue and that the company can be sued for a willful violation are surprising,” said Angela Kleine, an attorney who represents financial companies in FCRA matters. The FCRA imposes statutory penalties of $100 to $1,000 per willful violation, so damages could really add up if thousands of applicants received the same form and are potential class members, she said.

This decision is another reminder that employers must review their hiring paperwork and processes to ensure compliance with the FCRA. These matters are not taken lightly by the courts. The more documentation an employer puts into the disclosure form, the greater the legal risk. A waiver is a particular hot-button item that would draw a court’s attention. The inclusion of an employer waiver of liability in a document intended to warn an applicant that background information may be sought is at odds with the statute’s protective purpose, the court said.

Syed v. M-I, LLC , 2017 BL 16499, 9th Cir., No. 14-17186, 1/20/17

CARCO Group Presents Complimentary Webinar – 2017 New Form I-9


January 27, 3:00-4:00PM EST

U.S. Citizenship and Immigration recently revised Form I-9. Is your program still compliant?

Find out by registering for this complimentary webinar, hosted by CARCO’s I-9/E-verify Product Manager, David Hair.

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What will be covered?

David will highlight the recent changes to Form I-9, important information to stay compliant, CARCO’s I-9/E-verify solution and more!

Who should attend this webinar?

Experienced I-9 professionals and novices alike will benefit from this in depth overview.

Have a scheduling conflict?

No worries! Simply register for the event to receive an archived recording 2 business days following the event.

 

View Systems Requirement for Webinar Participation

 

Express Services Settles Background Check Class Action for $5.7M

Plaintiff Jose Flores sued Express Services alleging that they violated pre-adverse action notice to employees and job applicants, as required by the FCRA, by not affording them the opportunity to correct any inaccuracies in background checks before Express took adverse action against them. Defendants deny that their actions violated the law.

Mr. Flores and Express Services agreed to settle the claims alleged in the case to avoid the cost and risk of trial.

The Settlement Agreement provides the following benefits:

  • Defendants have changed practices to address the conduct complained of in the litigation.
  • Defendants will pay the sum of $5,750,000.00 into a Settlement Fund.

Important lesson to employers: Over the last few years, federal courts have increased scrutiny of employer compliance with the FCRA’s adverse action requirements. Employers must follow the requirements if they intend to take adverse action against a job applicant or employee BEFORE the adverse action is taken.

Simply put, if you intend to deny employment based upon the results of a background check, you must provide a pre-adverse action notice to the individual, including a copy of the consumer report. This action gives the applicant or employee an opportunity to correct any mistakes in the report and discuss it with you before the company takes adverse action. Failure to do so – now more than ever – will most likely result in a lawsuit you cannot win.

To learn more on FCRA compliance click here or contact a CARCO Specialist at 866-557-5884.

 

FINRA Fines Several Large Financial Companies $14M for Non-Compliance

finra-logoOn December 21st, the Financial Industry Regulatory Authority (FINRA) announced that it fined several large financial companies a total of $14 million for record -keeping issues that may have allowed company and customer documents to be altered.

According to FINRA, the companies failed to keep millions of electronic documents in a “write once, read many” format, which would have made it impossible to modify or destroy records once they were written.

FINRA is an independent, not-for-profit organization authorized by Congress to protect America’s investors by making sure the broker-dealer industry operates fairly and honestly. The do so by:

  • Writing and enforcing rules governing the activities of 3,869 broker-dealers with 641,133 brokers;
  • Examining firms for compliance with those rules;
  • Fostering market transparency; and
  • Educating investors.

CARCO has several products that help financial companies stay FINRA compliant, including:

  • FINRA Broker Sanctions Search Solution
  • Financial Anomalies Search Technology (FAST)
  • Federal Financial Institution Examination Council (FFIEC)
  • Self-Regulated Organizations Checks (SRO)
  • Many more

Let CARCO be your first line of defense against FINRA non-compliance.  Contact a CARCO Specialist at 1-866-557-5984 or click here to be contacted directly.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Starbucks Hit With Class Action for Violating the FCRA Relating to a Background Check

starbucks-logo-051711Jonathan Rosario claims that Starbucks Corp. denied him a job based on inaccurate results of a background check, without giving him a proper chance to correct those results. In doing so, he claims, Starbucks violated provisions of the FCRA.

In March 2016, Rosario applied for a job at Starbucks in Castle Rock, CO. The background check performed on him listed criminal felony and misdemeanor records from counties in Pennsylvania, some of which involved violent crime and drug-related charges.

Rosario claims that by the time he received the letter from Starbucks informing him that the results of his background check did not meet the company’s requirements, Starbucks had already removed him from consideration for employment.

Rosario says the criminal history that showed up in his Starbucks background check is inaccurate and false. He believes those entries resulted from identity theft, especially since he has never been to Pennsylvania.

Rosario challenged the inaccurate background check by following the dispute procedure of the consumer reporting agency that performed the background check for Starbucks. The errors were corrected, and a representative confirmed to Rosario that a corrected report had been forwarded to Starbucks.

Rosario then contacted Starbucks in an attempt to revive his job application, he says. However, the company declined to revisit its decision to deny him a job.

The law requires that before an adverse decision is made, the job applicant must get a copy of the report and be given a chance to dispute and correct its contents. By failing to give Rosario a meaningful opportunity to dispute the contents of his Starbucks background check, he claims, Starbucks violated the pre-adverse action notification requirements in the FCRA.

Rosario proposes to represent a nationwide plaintiff Class that would include U.S. persons who applied for a job at Starbucks and who were the subject of a Starbucks background check report on which the company based an adverse employment decision, but who did not receive a timely copy of that report or the FCRA summary of rights.

He seeks an award of actual, statutory and punitive damages for himself and the plaintiff Class and reimbursement of court costs and attorneys’ fees, all with pre- and post-judgment interest.

There is an interesting lesson for employers here: Employers may want to revisit their policies regarding keeping a job open while the selected candidate is disputing a background report. The FCRA does not require that jobs be kept open during a dispute. No one can predict what a judge or jury might decide, but either way it will be extremely costly for Starbucks to defend their actions. If this case is decided in plaintiff’s favor, employers will certainly want to revisit their dispute waiting policy.

CARCO can help keep you FCRA compliant. CARCO’s onboarding platform allows clients to be notified if a dispute has been opened based on the clients’ work flow and their decision on whether or not to keep the job open during the dispute.

Contact a CARCO Specialist at 1-866-557-5984 or click here for information on how CARCO’s onboarding platform can keep your company FCRA compliant!

 

Jonathan Rosario v. Starbucks Corp., Case No. 2:16-cv-01951, in the U.S. District Court for the Western District of Washington.

Wegmans Hit with Class Action for FCRA Violations Related to Background Checks

wegmans_logoTwo Wegmans Food Market employees have accused the supermarket chain of violating the FCRA by inappropriately using consumer background checks to screen job applicants and not telling them first.

Plaintiffs Ashleigh Wheeler, who was hired in 2013 as a cashier, and Jerah Brewster, who was hired in 2015 by the grocer as a pharmacy technician and later worked as a coffee shop attendant, filed the proposed class action lawsuit in New York federal court.

Wheeler and Brewster say they completed Wegmans’ standard electronic documents related to their employment which included an authorization to conduct a background check and a credit check.

However, the pair contend that Wegmans’ online authorization for a background check failed to properly disclose to them that the grocery chain would obtain consumer background reports.

According to the class action, Wegmans, “acted willfully and in deliberate or reckless disregard of its obligations and the rights of plaintiffs Wheeler, Brewster and other class members without making the required disclosure.”

Additionally, under the FCRA, job applicants have a right to obtain their consumer reports and to have errors in the reports corrected. But Wegmans’ background check authorization document allegedly failed to inform job applicants of this right.

Instead, the lawsuit states that the document contained wording that released Wegmans from all liabilities related to information found in the background check.

The authorization allegedly included the following language: “I hereby release Wegmans, my former employers, and all other persons or entities contacted by Wegmans from any and all claims, demands, or liabilities arising out of or in any way related to the release, disclosure, and use of such information.”

The Plaintiffs’ allege that the inclusion of this provision in the same document as the background authorization is a direct violation of the FCRA.

The pair claim they were misled about the nature and purpose of giving consent for the consumer background check and had their privacy subsequently invaded.

They are seeking to represent a nationwide Class of all Wegmans employees and job applicants who were the subjects of consumer reports obtained by the supermarket chain over the past five years.

The lawsuit is requesting not less than $100 but not more than $1,000 in compensation for each FCRA violation as well as punitive damages.

Over and over again we hear about class action lawsuits regarding FCRA violations. The FCRA is very clear. Organizations must ensure they are in compliance or risk being sued. Partnering with a reputable background screening company is one way of ensuring compliance. Contact CARCO Group to see how we can help – 1-866-557-5984.

 

 

Wheeler, et al. v. Wegmans Food Markets Inc., Case No. 6:16-cv-06825, in the U.S. District Court for the Western District of New York.