Source: http://legalsolutions.thomsonreuters.com/law-products/news-views/corporate-counsel/the-swelling-tide-of-fair-credit-reporting-act-fcra-class-actions-practical-risk-mitigating
Timestamp: 2016-12-04 20:21:40
Document Index: 670281540

Matched Legal Cases: ['§ 1681', '§ 1681', '§ 7001', '§ 1681', '§ 168', '§ 1681', '§ 1681', '§ 1681', '§ 1681', '§ 1681', '§ 611', '§ 1681', '§ 168', '§ 168', '§ 168', '§ 1681', '§ 1681', '§ 1681', '§ 1681']

Before an employer may obtain a consumer report from a CRA, typically it must make a "clear and conspicuous" written disclosure to the consumer in a document that consists "solely" of the disclosure that a consumer report may be obtained.7 The applicant or employee must provide written permission for the employer to obtain a consumer report.8 The employer must also make a certification to the CRA regarding its "permissible purpose" for the report and its compliance with relevant FCRA provisions and state and federal equal opportunity laws.9 If the employer procures an "investigative consumer report," additional disclosures are necessary, the employer must allow the employee to request information about the "nature and scope" of the investigation, and the employer must respond in writing to any such request within five days.10
After the employer obtains the consumer report or investigative consumer report on an employee or applicant for employment, the employer must follow certain requirements if it intends to take "adverse action" against the applicant or employee based even in part on the contents of the report. An adverse action broadly includes "a denial of employment or any other decision for employment purposes
that adversely affects any current or prospective employee."11
A statement setting forth the applicant's or employee's right to obtain a free disclosure of his or her report from the CRA if the
applicant or employee makes a request for such a disclosure within 60 days; and
A statement setting forth the applicant's or employee's right to dispute directly with the CRA the accuracy or completeness of any
information contained in the report.15
The FCRA allows an applicant or an employee to pursue a private right of action against an employer for "negligently" or "willfully" failing to comply with any of the FCRA's requirements.17 A lawsuit must be brought by the earlier of two years after the date of the plaintiff's discovery of the violation, or five years after the date on which the violation occurred.18 The remedies vary in important ways. A negligent employer is liable for actual damages and reasonable attorneys' fees and costs.19 An employer found to have willfully failed to comply with the FCRA is liable for actual damages or statutory damages (ranging between $100 and $1,000), punitive damages and attorneys' fees and costs.20
View the full report, including mitigating measures, online. About the authors
Rod Fliegel, co-chair of the Hiring and Background Checks practice group, has broad subject matter experience and expertise in class action defense and the intersection of the federal and state background check laws, such as Title VII and the Fair Credit Reporting Act. He has extensive experience defending employers in state, federal and administrative litigation, including matters with the Equal Employment Opportunity Commission, the Federal Trade Commission, and the New York Office of the Attorney General. Jennifer Mora, a shareholder in Littler's Los Angeles office, advises employers and consumer reporting agencies on the intersection of federal and state background check laws. She also regularly defends employers and consumer reporting agencies in federal and state courts against claims brought under the Fair Credit Reporting Act and its state law equivalents.
William J. Simmons, an associate in Littler's Philadelphia office focuses his practice in a wide range of labor and employment matters, ranging from nationwide wage and hour class and collective actions to individual lawsuits. He regularly defends employers in connection with discrimination charges filed at the Equal Employment Opportunity Commission, state administrative agencies and handles cases involving employment claims, in connection with the Fair Credit Reporting Act. References
8 15 U.S.C. §§ 1681b(a)(3)(B) and 1681b(b). For DOT-regulated motor carriers, and where the applicant applies for employment by mail, telephone, computer or other similar means, consent may be oral, written or electronic. 15 U.S.C. § 1681b(b)(2)(B)(ii). In addition, the Electronic Signatures in Global and National Commerce Act (ESIGN), 15 U.S.C. § 7001, generally gives legal force to electronic signatures, contracts, and other records. The FTC issued an opinion letter in 2001 indicating that it believed that a "consumer's consent is not invalid merely because it is communicated in electronic form" under the FCRA as a result of ESIGN. See FTC Opinion Letter May 24, 2001 (Brinckerhoff). Nevertheless, employers should consult with their counsel before making any changes to their FCRA procedures, including any contemplated transition to electronic records. 9 15 U.S.C. § 1681b. 10 15 U.S.C. § 168ld.
11 15 U.S.C. § 1681a(k)(l)(B)(ii). 12 15 U.S.C. § 1681b(b). If an individual contacts the employer in response to the pre-adverse action notice to say there was a mistake (inaccuracy or incompleteness) in the consumer report, the employer may exercise its discretion whether to move forward with the hiring decision or engagement; the FCRA does not dictate a course of action. However, by law, the CRA must, within 30 days, promptly investigate any dispute about the accuracy or completeness of the report from the individual. 15 U.S.C. § 1681i. If the CRA updates the consumer report, both the individual and the employer will receive notice. Please note, however, that related state and local laws may differ. 13 Obabueki v. IBM and Choicepoint, Inc., 145 F. Supp. 2d 371, 392 (S.D.N.Y. 2001). 14 15 U.S.C. § 1681m(a). 15 Id. DOT-regulated motor carriers are not required to provide a "pre-adverse action" notice to applicants or employees if the applicant applied for employment by mail, telephone, computer or other similar means. 15 U.S.C. § 1681b(b)(3)(B). Rather, motor carriers must provide to the individual, within three days of taking adverse action, an oral, written or electronic notification that adverse action has been taken, which must include the same disclosures required in "adverse action" notices for non-trucking employers. Id.
16 See, e.g., Beverly v. Wal-Mart Stores, Inc., 2008 U.S. Dist. LEXIS 2266 (E.D. Va. 2008); see also Johnson v. ADP Screening and Selection Services, 768 F. Supp. 2d 979, 983-984 (D. Minn. 2011) (rejecting the plaintiff's argument the employer must wait at least as long as the CRA has to reinvestigate a consumer dispute, per § 611, because the plaintiff's interpretation "would create untenable constraints on employers. If adopted, each time an employer wanted to hire, it would be prevented from acting if the consumer report of any applicant – even one that it had no intention of hiring – contained information that reduced that applicant's competitiveness. The employer would then have to place the entire process on hold and leave the position unfilled until the reporting agency had 30 days to investigate."). 17 15 U.S.C. §§ 1681n and 1681o. 18 15 U.S.C. § 168lp. 19 15 U.S.C. § 168lo.
20 15 U.S.C. § 168ln. Some courts have ruled that statutory damages may be recovered notwithstanding the absence of any actual damages. See, e.g., Bateman v. Am. Multi-Cinema, Inc., 623 F.3d 708, 719 (9th Cir. 2010). Some courts have also ruled that the lack of any actual harm does not defeat the plaintiff's standing to proceed in federal court. See, e.g., Robins v. Spokeo, Inc., 742 F.3d 409, 412 (9th Cir. 2014). 21 Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 52, 69 (2007). 22 See id.; see also Fuges v. Southwest Fin. Servs., Ltd., 707 F.3d 241, 250-255 (3d Cir. 2012) (the defendant's interpretation of the terms "consumer reporting agency" and "consumer report" in § 1681a of the FCRA were not objectively unreasonable because the terms are ambiguous as applied to its real property-related reports, the defendant's reading had a foundation in the statutory text, and no circuit court or federal agency previously had opined on the issue); Long v. Tommy Hilfiger, U.S.A., Inc., 671 F.3d 371, 376-377 (3d Cir. 2012) (merchant's interpretation of the term "expiration date" in § 1681c(g)(1) of the FCRA was erroneous, but the violation was not willful, because the merchant's interpretation had a foundation in the statutory text and no circuit court previously had ruled on the issue); Shlahtichman v. 1-800 Contacts, Inc., 615 F.3d 794 (7th Cir. 2010) (merchant's interpretation of the term "print" in § 1681c(g)(1) of the FCRA was correct, but even if erroneous, would not support a willful violation because no circuit court or federal agency previously had opined on the issue); Levine v. World Fin. Network Nat'l Bank, 554 F.3d 1314, 1318-1319 (11th Cir. 2009) (the defendant credit bureau's interpretation of its obligations under § 1681e(b) of the FCRA was correct, but even if erroneous,