A new Florida federal district court case is yet another reminder of the minefield of federal and state regulations governing employer criminal background check forms.  In Graham v. Pyramid Healthcare Solutions, the Court certified a class action against the employer under the federal Fair Credit Reporting Act and ruled that whether the employer willfully violated the FCRA, based on the employer’s use of a disclosure form supplied by its background check vendor, was a question of fact.

Employer background checks on employees and applicants are regulated by “ban-the-box” restrictions in many states and localities, “mini” state laws regulating the use of consumer reports, and the FCRA.  Failing to successfully maneuver through these laws can lead to significant exposure to liability, especially when employers are sued on a class–wide basis.

In Graham, plaintiff Denise Graham brought a class action claim against Pyramid Healthcare Solutions, claiming that its background check disclosure included extraneous information that ran afoul of the FCRA’s “solely of the disclosure” requirement.  On June 28, the District Court for the Middle District of Florida denied Pyramid’s motion for summary judgment because it found that a jury could reasonably conclude that the background check disclosure form willfully violated the FCRA.

According to Graham, the form included “numerous items of information and authorizations that were unrelated to the disclosure.”  These items included a “business logo,” lines for “Organization Name” and “Account,” the name and address and phone number of the consumer reporting agency, a false statement regarding a summary of rights, various state law disclosures, and a broad authorization requiring class members to forego their legal rights.  In the Court’s view, a disclosure form with these attributes could constitute a willful violation of the FCRA – which was an issue for the jury to decide.  The possibility of willfulness was particularly present, according to the Court, where Pyramid “simply used a form that had been provided to it by a third-party background check vendor.”

The Court also granted Graham’s motion for class certification – exposing Pyramid to the possibility of class–wide statutory damages of $100 to $1,000 per class member, plus punitive damages and attorneys’ fees.  According to the Court, the question of whether the disclosure form constituted a willful violation of the FCRA in this instance “can be decided uniformly for all class members.” 

Graham serves as a reminder to all employers to verify whether their background check disclosures comply with the FCRA.  Although an employer’s background check vendor may deal with these issues on a day-to-day basis, using a vendor’s standard form does not guarantee compliance.