The major retailer Amazon and staffing provider Staff Management | SMX were sued by a person whose job application was rejected based on the results of a background check. This case has nothing to do with the use of a background check. It is all about the process that must be followed. Federal law states that applicants must receive a copy of the report (based on which the application was rejected) or a summary of their rights according to the Fair Credit Reporting Act (FCRA). The law is intended to provide the applicant with an opportunity to identify any errors in the report before a negative decision is made against the candidate’s eligibility based on its content. In the Amazon case, the plaintiff claims that the report erroneously claimed that he had a felony conviction for cocaine possession, eliminating him for consideration. This class action suit seeks to demonstrate that Amazon and Staff Management | SMX routinely fail to follow the mandated process for dealing with adverse background checks.
Similar cases have been filed against other staffing agencies as they attempt to verify the credentials and suitability of contingent workers for client engagements.
Under the Fair Credit Reporting Act (FCRA) of 1970, adverse action covers a gamut of actions including the denial of a job to an applicant, termination of a worker, and also the denial of a promotion based on the results. The employer needs to notify the person of the proposed action at least twice, under the notice requirements of the FCRA.
Notice Prior to Adverse Action:
Notice after Adverse Action:
Though the FCRA does not stipulate the window of time which must be provided between these two notices, providing a gap of 5 business days would be considered as a reasonable period. The notice may be sent as an email (with a read receipt) or by normal mail (with a return receipt) to document that the notices were served as per the FCRA’s requirements.
The FCRA provides a private right of action, and allows a private person to sue for damages against businesses that use consumer reports but fail to comply with the requirements of the FCRA. A negligent violation entitles a consumer to “actual damages” or the amount of damages or harm actually sustained by the consumer plus attorneys’ fees and costs. On the other hand, a willful violation entitles the consumer to statutory damages of $100 to $1,000 per violation (at the court’s discretion), plus punitive damages, actual damages, and attorney fees and costs. These costs could quickly reach astronomical proportions in a class action suit, making it even more important to employers to ensure compliance.
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