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Background Check Lawsuits: Legal Rights of Employees, Job Applicants

This Alert Affects:

Employees and job applicants who underwent background checks as a condition of employment.

What's the Problem?
Several companies have been accused of violating a federal law known as the Fair Credit Reporting Act when running background checks on employees and job applicants.
What Is the Fair Credit Reporting Act (FCRA)?
The Fair Credit Reporting Act (FCRA) is a federal privacy law that outlines how employers can collect and use certain consumer information, such as credit information and criminal background information, when determining whether someone should be hired or promoted.
Type of Lawsuit
Class action or individual
How Can a Lawsuit Help?
A lawsuit can give you a chance to seek compensation from your employer or potential employer for lost earnings or job opportunities.

A number of companies, including Kmart, Home Depot, Wal-Mart, and Dominos, have been sued by employees and job applicants for failing to comply with federal background check laws.  These lawsuits allege that the companies violated the Fair Credit Reporting Act (FCRA), a federal law that says companies must follow certain procedures when requesting and using background checks for employment purposes.

If you’ve had a background check run for employment purposes or believe information contained in your report prevented you from getting a job, get in touch with us using our contact form. You may be able to file a lawsuit against the company that ran your background check or denied you employment.

Background Checks: What Are My Legal Rights?

The FCRA provides you with a number of privacy rights when a background check is conducted for employment purposes. Whether you are applying for a new job, vying for a promotion or undergoing a background check for another employment-related reason, the employer must comply with this law. If not, you may be able to sue the employer who requested the background check or the company who provided the background check for violating federal law.

Written Permission

Companies are required to obtain written permission from you before performing a background check, and must provide a disclosure – separate from other any documents (e.g. employment applications) – stating that a background check may be conducted for employment purposes.

Firing, Denying Employment, or Failing to Promote

Before an employer decides to fire you or deny you a job or promotion because of information in your background check, it must:

  • Provide you with a copy of the background check
  • Provide you with a summary of your rights under the Fair Credit Reporting Act and
  • Provide you with a reasonable amount of time to dispute the accuracy of the background report

The employer must provide this information to you – and time to dispute the information in your report – before they can fire you or deny you a job/promotion. If an employer notifies you by phone or otherwise that you are not being hired or being fired based on the results of your background check before giving you this information, they may have violated the FCRA.

After firing you or denying you a job or promotion, the employer must:

  • Provide you with the contact information of the company who provided the background report and
  • Provide you with notice of your right to receive a free copy of the background report and your right to dispute the accuracy of the report

What Information Can Be Included in a Background Check?

Background checks can contain a variety of information that can be used by an employer to make employment-related decisions.  Certain types of information, however, cannot be reported and a background check containing this information may violate federal law.

What Can’t Be Reported?

  • Incomplete information
  • Records of dismissed charges or other non-convictions older than 7 years
  • Records of criminal convictions, dismissals, arrests, or other non-convictions that have been expunged
  • Records of arrest older than 7 years
  • Records of non-criminal traffic offenses older than 7 years
  • Records of bankruptcies older than 10 years
  • Records of evictions older than 7 years
  • Other adverse information older than 7 years

What About Misleading or Inaccurate Information?

The Fair Credit Reporting Act also prohibits companies who provide background checks from reporting information that is considered misleading or inaccurate.  Such information can include:

  • Reporting information on the wrong person
  • Reporting debts that have been discharged in bankruptcy
  • Inaccurate reporting of criminal records (for instance, reporting a dismissed charge as a conviction or reporting an incorrect offense title or date)
  • Reporting the same charge multiple times on the same report

If a background check company has reported inaccurate or misleading information about you to an employer or landlord, you may be entitled to compensation. Get in touch with us to learn more.

Discriminatory Background Checks

While a number of employers carry out background checks to determine whether someone should be hired or promoted, employers cannot use background check information to discriminate against an employee or job applicant on the basis of race. In fact, the U.S. Equal Employment Opportunity Commission  (EEOC) has been reviewing its stance on the use of arrest records during hiring processes following concerns that African Americans and Hispanics face discrimination under "blanket" hiring policies that exclude applicants with past convictions.

EEOC Cases: How Background Checks Can Discriminate 

Several employers have already faced lawsuits that claimed their hiring policies were discriminatory.  For instance, a lawsuit against Pepsi resulted in a $3.13 million settlement to resolve claims that the company discriminated against African Americans in its background checks.  The Equal Employment Opportunity Commission (EEOC) found that Pepsi disproportionately excluded African American applicants, as the company’s hiring policy did not permit those who had been arrested to be hired for permanent jobs, even if they were never actually convicted of any crime.

How Can a Lawsuit Help Me?

If you were subject to an illegal or discriminatory background check, a class action lawsuit could help you:

  • Seek compensation for lost earnings, lost job opportunities and other damages
  • Seek changes to company policies to ensure discriminatory and/or illegal practices stop

If you think you have been denied a job or a promotion because of your background check – including criminal history – it may be time to consider a lawsuit. If you’d like to learn more, start by telling us your story. You can use this form to get in touch. 

Sep 23, 2013
Newly Filed / Newly Settled

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Case Resources

Mack v. Panera, LLC. Complaint
Case number 0:14-cv-61672, U.S. District Court for the Southern District of Florida
The Fair Credit Reporting Act (FCRA)
Federal law that requires consumers be told when their applications for credit, insurance or employment are denied due to information on their credit reports.
A Summary of Your Rights Under the FCRA
The Federal Trade Commission's (FTC) summary describing your rights under the Act, who has access to your credit report, and options for limiting unsolicited offers for credit and insurance.
EEOC v. Pepsi Bottling Group Settlement
Case number 2:05-cv-72583, U.S. District Court for the Eastern District of Michigan
Guide to Employment Background Checks
The Equal Employment Opportunity Commission's (EEOC) guide to what job applicants and employees should know about the proper use of background checks during the hiring process and how to prevent discrimination.