5 Ways to Avoid FCRA Class Action Litigation

2 min read
Fri, Feb 20, 2015


Now more than ever, FCRA class action lawsuits in employment are on the rise. Within the past few weeks, Pizza Hut and Michaels were both hit with litigation regarding FCRA complaints about the use of employees' background checks. Here are 5 ways to avoid FCRA class action and keep your human resources department out of the court system.

Disclose and Notify

In order to begin a background check, the applicant must be notified of the background screens that will be run. The applicant must be provided a standalone form, separate from the application, to include their personal information. The applicant needs to be notified that the background checks will be used in the decision making process. The employer must also provide the applicant with a copy of their Summary of Rights under the FCRA. Many FCRA class action suits have been brought against companies with extraneous language or liability releases on the disclosures or if the disclosures were part of the employment application. 


After disclosing that background checks will be run, the applicant needs to authorize the transaction. The applicant must sign and date the authorization form. The signed authorization form should be kept within the applicant's file to ensure proper documentation of authorization.

Pre-Adverse Action

If a background check reveals findings that would prevent the hire of an applicant, the employer must follow the required pre-adverse action procedure within 3 days of the report. The applicant should then be notified of the intent to deny employment, a copy of the screening report and the screening company that supplied the information. Many companies have been penalized for not providing applicants with a copy of the report, their Summary of Rights under the FCRA Act or not following the pre-adverse action procedure altogether.

Time for Dispute

Once the applicant has been notified of the pre-adverse action, the employer must notify and allow the applicant time to dispute the report findings. The FCRA does not specify the amount of time that an applicant has to dispute the background check but many class action suits are due to employers not giving enough time. Five working days is generally accepted as enough time.

Adverse Action

After the alloted time for dispute of report findings, the applicant should be provided with a Summary of their Rights under the FCRA, the name, address and phone number of the reporting agency, notice that they may request their report and an adverse action letter. 

Read more here: Can you email adverse action notices?

VeriFirst's FCRA certified staff are available to answer questions and help employers stay compliant with our free templates. Download our complete compliance library and contact us if you have questions. Compliance Library for Employee Screening


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