How a Hiring Technicality Can Land Companies in Court

A slew of lawsuits has been filed lately against companies accused of violating FCRA in their hiring processes. The most recent company to join that list is Starbucks Corp. for a violation in its adverse action process. A Colorado man named Jonathan Rosario filed a class action lawsuit against Starbucks after being denied a job based on an inaccurate background screening report. According to Rosario, the report contained felony and misdemeanor criminal records from Pennsylvania. Rosario, it turns out, has never even visited Pennsylvania.

As a background screening partner, we see not one but two problems with Starbucks’ background screening process. The first is, Starbucks was making a hiring decision based on records that weren’t accurate.  A good background screening provider verifies every record to make sure a criminal or disqualifying record isn’t a case of mistaken identity. Both the company and the client have a stake in making sure all background information is accurate.

The second problem is in the company’s Adverse Action process. Rosario received a letter stating that his background report had eliminated him from consideration, but he had already been disqualified from the employment process.

When Rosario used the Starbucks’ dispute system to provide a corrected report, the company refused to revisit the decision. FCRA is clear on this issue: A candidate must be given time to correct any inaccurate information before they are disqualified from a job. 

The Fair Credit Reporting Act (FCRA) was originally enacted in 1970 to protect the privacy of individuals’ personal information. Only recently have so many employers been hit with lawsuits for allegedly violating the act. It’s usually a hiring technicality, often in the background screen, that lands these big companies in court. Whole Foods, Dollar General, and Panera Bread have all been sued for violating FCRA.

Some things to remember about FCRA:

  • An employer must give notice that an applicant’s background will be investigated and ask for authorization in a way that’s “clear and conspicuous” so it stands out from the rest of a job application. In fact, an online application that is one document, without a separate notice and authorization, is illegal. The notice and authorization must stand out from the rest of the application.
  • An employer must notify a candidate if something in their background is considered “disqualifying” before actually disqualifying them. The applicant should be given time to fix any errors in their consumer report before they are officially disqualified.

Companies are Vulnerable and the Penalties Can be Steep

Though the FCRA guidelines are nothing new, there is a recent trend for lawsuits against companies for violating the guidelines. Here are ways for employers to mitigate the risks:

Hand-Vetted Records

This is important and should not be overlooked. Wolfe screeners verify every record to make sure it doesn’t belong to someone else with the same name, as was the case with Rosario. We can also take on all the adverse action paperwork to make sure every step of the background screening process is compliant with FCRA.

Wolfe’s Adverse Action Service for Peace of Mind

Many background screening clients hire us to handle their adverse action program too. It works like this: Once a client notifies us that there is disqualifying information in the background screening report, we verify that it does indeed belong to the applicant.  We then send an Adverse Action letter by email and snail mail, giving the applicant the legally recommended time to correct or dispute any errors. Clients are kept in the loop on any disputes that arise.

If you have questions about background screening or would like to add Adverse Action to your current service, give us a call at 800.230.2991 or fill out our contact form and we’ll get back to you.