Why Johnson & Johnson Lost a Court Battle Over Pre-Adverse Action Mistakes

Jennifer Gladstone

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The U.S. District Court for the Middle District of Florida refused to dismiss a case alleging that pharmaceutical giant Johnson & Johnson pulled a job offer from an applicant over inaccurate background screening results.

On June 28, 2011, Thomas Miller was offered a job as a business specialist for J&J in the Orlando area, with the condition that he had to pass a background check first. Miller signed an authorization form that allowed background screening firm Yale Associates to conduct the check.  Criminal records in that report caused Miller’s job application to be flagged for review. According to the complaint, J&J called Miller and formally rescinded the job offer on July 12th.

On July 21st, Miller received a pre-adverse package from the screening company. Not only did he receive the copy of the report AFTER he lost the job, but he discovered that the incriminating information on the report was wrong. Miller called J&J to report the mistakes, but Yale mailed an adverse action letter on July 25th indicating the job offer was withdrawn. Yale investigated, corrected Miller’s background report and sent it to J&J, but by that time the job had been given to someone else.  Miller sued J&J alleging the company violated the Fair Credit Reporting Act (FCRA) by failing to follow required adverse action procedures.

The judge found that Yale did everything required under the FCRA, so the court granted summary judgement for the reporting agency.  On the other hand, the court determined the plaintiff showed ample evidence that he suffered damages since his current jobs paid less than he would have earned at J&J.

There are several important lessons here. Most notably, it is the employer’s responsibility to make sure all adverse action steps are taken before any decision is made. J&J argued in court that they only made an “internal” decision to revoke the offer. They used this justification to move for Summary Judgment, but phone records and internal emails show a decision was made to pull the job offer before Miller received any adverse action. The judge ruled that an internal decision is still a decision. According to the law, you cannot make any kind of decision –internal or otherwise- before the adverse action plays out.

Before any decision is made an applicant must get:

  1. A Pre-Adverse Action Notice
  2. A copy of the report and a summary of their rights
  3. Adequate time to address and fix any incorrect information

Not only do you need to have a clear adverse action policy in place, but this case also shows us how important it is to make sure it is clearly understood by every member of your hiring team.

Employer Guide to Adverse Action

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Jennifer Gladstone

Posted By: Jennifer Gladstone

Jennifer Gladstone is a news anchor and journalist with more than 20 years of experience in front of the camera. She's worked in several markets, large and small, and has performed nearly every task needed in a newsroom. As EBI’s Screening News Editor, she keeps EBI’s customers and blog subscribers up to date on the latest screening news and legislative alerts affecting companies of all sizes.

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