On March 30, a Florida federal judge refused to dismiss a proposed class action accusing Whole Foods Market Group, Inc. of violating the Fair Credit Reporting Act with its employee background check notification methods, ruling the suit alleged Whole Foods’ liability release was included in a disclosure document. As we previously reported in December, Whole Foods was added to the long list of employers that have been hit with nationwide class action lawsuits under the FCRA based on their background check practices.
The named plaintiff in the class action suit, Colin Speer, claims that Whole Foods includes a waiver and release of liability in a disclosure that a consumer report may be obtained for employment purposes, which allegedly violates the FCRA. Under the FCRA, employers are generally required to provide applicants with a clear and conspicuous disclosure “consisting solely of the disclosure” that a consumer report may be obtained for employment purposes.
Whole Foods sought dismissal of the suit by arguing that the plaintiff’s own exhibits shows that it gives its workers two separate forms – one with the disclosure and another with the liability release. U.S. District Judge Richard A. Lazzara, however, held he was bound by the facts alleged in the complaint, which claimed the forms should be considered one document because they were read and signed at the same time. Accordingly, Judge Lazzara concluded that the plaintiff’s “complaint states a claim for relief.”
Although various courts have decided the issue differently, employers should be aware that background check disclosures that include releases have become a frequent target of FCRA class action lawsuits in recent years. This is important because a violation of the FCRA carries with it the possibility of actual, statutory, and punitive damages.
The suit is one of a number of such recently filed lawsuits alleging that companies violated the FCRA in connection with background screening. For instance, we reported on February 18, 2015, that Publix Super Markets Inc. agreed to pay nearly $6.8 million in a class action lawsuit settlement over background checks under the FCRA.
Troutman Sanders LLP has extensive experience in FCRA litigation and compliance with respect to challenged disclosure forms and background screening. The growing number of lawsuits challenging employer disclosure forms warrants careful review of such forms by companies. Troutman Sanders will continue to monitor this area of law.