I have written countless articles about FCRA lawsuits over the last few years, and it seems they almost always end with the big-name company paying out millions to make the case go away. So I was intrigued by the judge’s decision to dismiss a recent case against Target, saying he did not believe the company “willfully” did anything to break the law. I reached out to our friend and expert Mary Poquette to try to figure out why this case ended so differently.
First, here’s a little background. A job applicant filed a punitive class action alleging that several statements in the disclosure and authorization document willfully violated the FCRA, which requires a standalone disclosure. Those statements included: a deadline to dispute inaccurate information; a statement that basically said signing the document is not a contract for employment; wording demanding dedication, trust and honesty from all employees; a notice saying anyone hired is an at-will employee; and finally, information on how to request a copy of their consumer report.
This seems like a lot of ammunition. How did they get to an outright dismissal?
Mary pointed out that location might have had a lot to do with the outcome. Most of these FCRA cases are settled before the parties ever see the inside of a courtroom. She says, in her experience, cases settle very quickly in California, Virginia and Pennsylvania. “These are very pro-consumer states with very experienced plaintiff’s bar in FCRA cases. If cases are brought in one of these three states, employers often seem to settle given that their chance of success seems very small when considering prior FCRA rulings.”
The Target case was filed in Minnesota, where Target is headquartered. There is limited precedent for class action FCRA cases in Minnesota. Poquette continued, “It appears the court took a practical approach in determining whether the extraneous language diminished the clarity of the disclosure/authorization, the specific language in question, and even if true, whether Target’s actions constituted a “willful” violation. We frequently do not see that same practical approach in other parts of the country.”
The majority of FCRA cases accuse companies of violating two main parts of the law: either including extraneous information in the disclosure/authorization, or not following adverse action requirements. In this case, as we mentioned, the named plaintiff was unhappy about language included in the disclosure. According to Poquette, companies tend to get in trouble for adding language that releases them from any liability. “The language of the disclosure/authorization in Target’s case did not include a waiver of liability, which is generally considered most egregious, and has already been cited in many complaints where settlement has occurred.” Poquette continued, “The FTC - in an opinion letter in the late 1990’s- specifically said inclusion of a waiver of liability violated consumer rights.” This judge did not see that the additional language in the Target document - even though there was a lot of it - distracted from the purpose of the disclosure.
Finally, the judge said there was a lack of clarity in the FCRA and lack of guidance from the FTC and higher courts. The Judge said that even if Target violated the FCRA, “it [the court] cannot conclude that [the plaintiff] plausibly alleges that such violation was willful.”
The Target decision is good news for employers, especially Minnesota employers. That doesn’t mean other cases will have such a favorable outcome, however. Employers, regardless of location, need to ensure their background screening documents – especially their disclosure and authorization – comply with all federal, state, and local requirements.
We sat down with attorney Scott Paler during this year’s NAPBS Mid-Year Conference to discuss why the disclosure and authorization forms seem to be getting so many employers in legal hot water:
SCOTT PALER // DeWitt Ross & Stevens
From the procedural standpoint, the biggest areas we are seeing lawsuits in right now, first are those related to the written consent materials for background checks. Most employers have heard that in order to run a background check on an applicant they need to supply a disclosure about that background check to the person and they need to obtain written consent. Most employers have understood that for a while, but what’s changed is that there’s been increased attention on the content of those forms, so It used to be as long as you checked the box, got some sort of written consent, you’re fine- you’re good to go- chances that you got sued was very remote. But that is not the case anymore. Plaintiff’s attorneys are literally reading through these documents line by line and identifying anything they consider to be extraneous or inappropriate, and the argument is that if there are extraneous or inappropriate things being included in the background screening disclosure, as part of that written consent material, that the disclosure is essentially invalid and that the background check should not be run. So we’re seeing class actions attacking employers for every background check on every job applicant that they’ve run in the last 2 or 3 or 4 years.