Does your background investigation authorization release contain a liability waiver? If so, you could be making a costly mistake. The Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681b(b)(2)(A)(i)-(ii) specifically forbids a liability waiver, and including one can be met with severe consequences. Earlier this year, an employer by the name of Quantum Global Technologies included a liability waiver in their authorization release and that illegal wording cost them nearly $175,000.
JD Supra reported that the initial settlement of just over $125,000 was rejected, and the plaintiff, Paniani Taafua, ended up settling at $174,980. The case was centered around the fact that over 1,000 applicants signed a form within a job application process that included a consumer report disclosure. This allowed the defendant, Quantum Global Technologies, to obtain a thorough third-party report on each applicant. Because the application contained a liability waiver as well, however, it was in direct violation of the FCRA. Ultimately, this made the case quite cut and dry in Taafua’s favor.
Cases like this are not random fluke scenarios that companies avoid by chance. Just last year, we highlighted (https://www.preemploymentscreen.com/how-a-liability-waiver-cost-this-firm-1-2-million/) a similar scenario in which a company illegally included a liability waiver in their background check. The mistake ended up costing them $1.2 million in a settlement.
So, how does a business go about avoiding this and other similarly costly mistakes? For starters, we recommend having your hiring documents be reviewed by competent employment legal counsel.
At Randisi & Associates, we strive to make compliance with the requirements of the Fair Credit Reporting Act very easy. Appropriate documents can be included in our online document submission process. In addition, our online process allows the applicant to complete the forms needed to perform the background investigation. This relieves your staff of having to enter the information, which drastically reduces the chances of critical input errors.
James P. Randisi, President of Randisi & Associates, Inc., has since 1999 been helping employers protect their clients, workforce and reputation through the implementation of employment screening and drug testing programs. This post does not constitute legal advice. Randisi & Associates, Inc. is not a law firm. Always contact competent employment legal counsel. Mr. Randisi can be contacted by phone at 410.336.0287 or Email: info@randisiandassociates.com or the website at randisiandassociates.com
