Many employers use background checks when evaluating potential candidates for hire. They do this for a variety of reasons, from basic due diligence to a desire to avoid negligent hiring claims in the future. If an employer intends to use this employment background check – often referred to as a consumer report – to take adverse action against the candidate, it must generally comply with the Fair Credit Reporting Act (“FCRA”) when doing so.
Specifically, when “using a consumer report for employment purposes, before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall” provide the candidate with a copy of the report and a summary of rights. Courts typically regard this disclosure requirement as the employer’s obligation, not the obligation of the consumer reporting agency providing the report. Surprisingly, in Doe v. Trinity Logistics, the District Court for the District of Delaware reached a conflicting conclusion – at least at the pleadings stage.
In Doe, the plaintiff applied for a job at Trinity Logistics in August 2016. She claims that Trinity ordered a consumer report from Pinkerton Consulting and Investigations as part of the hiring process, which Pinkerton “flagged” as having adverse information before providing it to its client. When Pinkerton failed to provide the plaintiff with a copy of her consumer report and summary of rights before Trinity took adverse action, the plaintiff claimed that Pinkerton violated the FCRA’s pre-adverse action obligations. Pinkerton disagreed, arguing that the plaintiff’s position was contrary to the FCRA, which requires the person “using” the consumer report to provide the disclosures.
The Court disagreed with Pinkerton at the pleadings stage. According to the Court, the plaintiff adequately pled that Pinkerton and Trinity had “shared decision-making responsibility,” which could impart pre-adverse action obligations on Pinkerton. As a result, it declined to dismiss the pre-adverse action claim against Pinkerton.
The Court’s decision in Doe is contrary to the generally accepted principle that a consumer reporting agency does not become a “user” of a consumer report by simply providing the report to its customer. The decision bears watching, though, as allegations of “joint use” could catch on if the Doe decision gains traction with other courts.