In another example of the continuing increase in background screening-related class actions, a national restaurant chain was on the receiving end of a class action lawsuit. In the nationwide class action, filed in the Central District of California, the plaintiff claims the restaurant violated the Fair Credit Reporting Act (FCRA) by failing to provide an FCRA-compliant disclosure form.
The plaintiff alleges that the restaurant’s consent and disclosure form failed to comply with the FCRA requirements because it included false information provisions, a post-employment authorization, and employment contract and at-will provisions. In addition to the noncompliant consent and disclosure form, the plaintiff also alleges that the restaurant failed to provide a written summary of rights under the FCRA. The complaint alleges that the FTC has issued guidance on what can be included in a consent and disclosure form, and that the restaurant’s failure to follow that guidance was a willful violation. The plaintiff further alleges that the violations were willful because the restaurant had access to “legal advice through its own general counsel’s office and outside employment counsel.”
In addition to the FCRA claims, plaintiff also asserts a claim under California’s Consumer Credit Reporting Agencies Act (CCRAA), Investigative Consumer Reporting Agencies Act (ICRAA), and California’s Unfair Competition Law (UCL). With respect to the CCRAA, the complaint alleges that the restaurant failed to provide a written notice including a check box that would allow applicants to receive a copy of their consumer credit report. The complaint alleges a similar violation under the ICRAA.
On the FCRA claims, the plaintiff seeks to represent a nationwide class of all applicants who applied for employment with the restaurant within the two years preceding the suit and who executed the disclosure and authorization form.
Similar suits have been filed against employers across the country regarding noncompliant disclosure forms. Last week Troutman Sanders wrote on this developing trend here and has blogged on similar class actions and related settlements here and here.
Troutman Sanders LLP has extensive experience in FCRA litigation and compliance with respect to challenged disclosure forms. This growing body of lawsuits challenging employer disclosure forms warrants careful review of such forms by companies. Troutman Sanders will continue to monitor this area of law.