Closer Look: FCRA – Employers’ Win, Lose, and Draw

About 3 min

Closer Look: FCRA – Employers’ Win, Lose, and Draw

diceOur Closer Look articles offer an in-depth analysis of background screening topics currently affecting employers. FCRA continues to a topic of keen interest.

In the past few days, three notable events have come to light in the world of employers, their background screening programs, and the FCRA. (The FCRA is the federal law that governs background screening for employment purposes.)

The Win (and a Potential Win)

Event services company Freeman successfully defended itself in a case brought by the EEOC in 2009 in regard to Freeman’s background screening program, which allegedly had a disparate impact on Hispanic, African American and male applicants. The Win: On February 20, 2015, the U.S. Court of Appeals for the Fourth Circuit not only unanimously affirmed summary judgment in favor of Freeman, but criticized the EEOC, noting the “district court found a ‘mind-boggling’ number of errors and unexplained discrepancies.” The Potential Win: Seeking to capitalize on its win on appeal, Freeman has asked a Maryland Federal Court to award Freeman $1.7 million in legal fees and expenses. This case moves on favorably for Freeman.

Awarding legal fees to the defendant in this type of case has precedent. In 2011, the Sixth Circuit awarded Peoplemark $751,942.48 in legal expenses in the matter of EEOC v. Peoplemark.

The Loss

Despite numerous setbacks in other cases, the EEOC has continued to pursue employers whose background screening program allegedly results in disparate impact for minorities. One of the EEOC’s most recent cases is EEOC v DolGenCorp LLC (Dollar General). Dollar General attempted to block the EEOC’s request to depose two store managers. The Loss: Earlier this week Illinois Federal Judge Sheila Finnegan ruled in favor of the EEOC to allow the store managers to be deposed by EEOC legal counsel. This case moves on favorably for the EEOC.

The Draw

On April 21, 2015, Home Depot reached a preliminary settlement of $1.8 million in Fernandez v. Home Depot USA. Brought by plaintiff’s bar, class representative Irene Fernandez alleged Home Depot used background screening forms that did not comply with the Fair Credit Reporting Act. The settlement, in which Home Depot presumably will not admit to any wrongdoing, will bring this class action case to a close. Home Depot will eliminate this distracting legal action, but will pay lots of money to do so.

EBI will continue to monitor and report on cases that affect an employer’s rights to conduct compliant background checks. Background screening continues to reduce the threat and impact of negligent hiring litigation while providing insight into candidates that may affect the safety and security of their business.

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