Avis Budget Car Rental recently agreed to pay $2.7 million to settle a Fair Credit Reporting Act (FCRA) class action lawsuit brought by job applicants who alleged the company engaged in improper background check practices in violation of FCRA.
FCRA regulates the information gathering and reporting activities of so-called third-party consumer reporting agencies (CRAs), defined as businesses that collect and/or evaluate information about individuals on behalf of a client. FCRA explicitly applies in cases where a CRA collects and provides information for “employment purposes,” and provides a set procedure that employers must follow when receiving a “consumer report” (essentially a background check) from a CRA on an employee or applicant.
The Avis litigation alleged that the company failed to use a clean, stand-alone form to disclose to applicants that it might conduct a background check as required under FCRA. Instead, the version of the form used by Avis, which was created by Avis’ third party background check provider, included extraneous information such as waivers of certain rights. The suit also alleged that Avis failed to provide applicants with the required pre-adverse action notice — a copy of the consumer report and a written description of FCRA rights — before rejecting applicants for reasons relating to their background checks.
There have been a growing number of FCRA class actions filed against employers in the last few years alleging similar technical violations surrounding third party background checks. These lawsuits, which expose employers to potentially millions of dollars in liability, serve as reminders about FCRA’s strict technical disclosure and notification requirements and the consequences of failure to comply.
Members of the Center for Workplace Compliance (CWC) can read more here.