Two large companies have recently agreed to pay out millions of dollars in a settlement over class action lawsuits for alleged violations of the Fair Credit Reporting Act’s authorization and disclosure requirements.
Frito-Lay Inc. has agreed to pay $2.4 million to settle a class action lawsuit alleging it violated the FCRA in its use of consumer credit reports without properly disclosing this practice to job applicants. Specifically, the suit alleges that Frito-Lay violated the FCRA by including their disclosure within a document that included “impermissible extraneous information.â€
Additionally, Petco has agreed to pay a $1.2 settlement to 37,279 job applicants who believe that they were subjected to Petco’s allegedly unlawful background check policies. The suit alleges Petco of “burying†their background check disclosure within its online application.
The FCRA requires employers to disclose to applicants that a consumer report for employment purposes may be obtained and provide applicants a “clear and conspicuous disclosure†in a document that consists solely of the disclosure- known as the “stand-alone†requirement. This requirement applies to hard copy disclosures as well as disclosures appearing in online applications or within Applicant Tracking Systems (ATS).
Employers should absolutely remain vigilant in their FCRA compliance and should routinely review policies and documents for compliance. These lawsuits certainly support what appears to be a growing trend in FCRA-related class action suits, with reports indicating FCRA related litigation increased by more than 9% between 2016 and 2017, and is expected to increase further in 2018.
