FCRA notifications are important because non-compliance can cost money – lots of money. In this case the Defendant agreed to establishing a fund of $2.5 million. Each claimant can receive up to $75. This company pays the price of non-compliance with some basic requirements of the Fair Credit Reporting Act.
Top Class Actions Website reports that the Defendant Firm, Postmates failed to provide them with the legally required stand-alone disclosure before requesting the background checks. Then, after the background checks were run, Postmates allegedly failed to provide the applicants with copies of the results and a notice of their rights before taking adverse action against the applicants based on the contents of the background check reports.
The Fair Credit Reporting Act requires that companies who use a consumer reporting agency to procure consumer reports e.g. criminal conviction searches, are required to provide a stand-alone disclosure to consumers i.e. applicants.
The Fair Credit Reporting Act requires that companies who are going to make an adverse employment decision based on any information, in whole or in part, in the consumer report provided by the consumer reporting agency must deliver a Pre-Adverse letter that includes a copy of the report. Why is this important? First consumer reporting agencies use three identifiers when doing a criminal conviction search. Those identifiers are name, address and date of birth. In a country with more than 250 million adults, it is possible that two different individuals can have the same name, date of birth and live in the same jurisdiction. One can have the criminal conviction and the other not have the criminal conviction. This Pre-Adverse process is intended to allow the applicant to tell the company and the consumer reporting agency that the information in the report does not pertain to them.
How can this type of situation be avoided? It is important for a company to establish an inside expert who can monitor these types of decisions. We have reported before in our blog where a company who followed some simple rules in documenting their hiring process successfully beat back similar allegations.
The time period covered under the class action lawsuit is July 31, 2013 and Sept. 24, 2015. So apparently there is a potential of more than 30,000 claimants. This could have been avoided
More information about the settlement is here.