On January 28, Michael's Stores, Inc. was hit with its second Fair Credit Reporting Act (FCRA) class action lawsuit challenging Michael's employment background check procedures in as many months. This lawsuit should serve as another reminder to employers to verify their background check procedures comply with both state and federal law.
According to the allegations in the complaint, the plaintiff applied for work with Michael's by completing an online employment application. This online employment application included a background check disclosure form. The plaintiff's complaint alleges that the location and the content of this background check disclosure violate the FCRA. As a result, the plaintiff seeks statutory damages between $100 and $1,000 per purported class member, as well as punitive damages and attorneys' fees.
The plaintiff claims that the background check disclosure that Michael's allegedly uses violates the FCRA for several reasons: (1) It is improper for the background check disclosure to be part of the employment application itself; (2) the disclosure improperly includes a liability release; and (3) the inclusion of state law background check-related notices renders the disclosure non-compliant with the FCRA.
The legal premise of all these claims is a requirement under the FCRA that mandatory disclosures required by the FCRA when an employer desires to obtain certain kinds of background checks on job applicants and existing employees must appear on a document consisting "solely" of the mandatory disclosures. While this "solely" requirement has not been interpreted literally by regulators, the potential flexibility in designing the form has not stopped multiple class action lawsuits premised on a strict, highly technical reading of the "solely" requirement.
Regardless of the merits of the case, this lawsuit serves as another reminder for employers that they should verify that their hiring policies comply with the FCRA. Troutman Sanders has extensive experience defending class action lawsuits pertaining to the use of background checks and working with employers' compliance departments to avoid class action lawsuits in the future.
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