Under the terms of a formal settlement agreement reached between home improvement retailer Lowe’s Companies, Inc., and a class of more than 37,000 applicants for employment, the company will pay $2,257,620 in monetary relief for its alleged failure to comply with the Fair Credit Reporting Act (FCRA).

The 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.  The FCRA explicitly applies in cases where a CRA collects and provides information for “employment purposes,” and delineates a set procedure that CRAs and employers must follow when compiling a consumer report (essentially a background check) on an employee or applicant.

The agreement, formally approved by the court, settles a class lawsuit brought earlier this year in federal court alleging that the company:  (1) failed to provide plaintiffs with a “clear and conspicuous” FCRA disclosure statement; and (2) denied employment to applicants based upon the contents of their background check without first providing the required “pre-adverse action” materials.

Members of the Equal Employment Advisory Council (EEAC) can read more here.