Factors That Help Employers From Facing FCRA Lawsuits

(Last Updated On: June 29, 2018)

FCRA compliance

It has been a tough couple of years for HR departments facing hiring litigation. Since 2014, there has been a staggering increase in FCRA Class Action Lawsuits plaguing many employers. This includes Home Depot, Disney, BMW, Starbucks, Dominos, and many more companies.

If a company’s procedures are not in compliance with the FCRA, it is likely a large group of individuals will have been affected. Plaintiffs are eligible to receive statutory damages (no proof of actual damages required) of $100.00 to $1000.00 per violation. Also, there is no cap on the damages that can be awarded. This increase in FCRA lawsuits has opened the eyes of other wrongful employment lawyers to start even more class action lawsuits. With the most high-level settlements favoring employees, there seemed to be no end in sight for HR departments facing this litigation.

Last month, there was finally a break for employers! A federal judge in California dismissed a class action case in the early stages against Paramount Pictures Corporation. Peikoff v. Paramount Pictures Corporation, No. 15-cv-00068-VC, Docket No. 13, on March 25, 2015.

Two main factors to comply with the FCRA during the hiring process are:
1. The Disclosure – A standalone disclosure form stating that you are going to be performing a background check on an applicant must be provided prior to conducting any background screening.
2. The Authorization – Applicants must complete and sign an authorization form that permits you to conduct a background check on the applicant.

To learn more about complying with the FCRA, please read: 5 Steps to Help Avoid an FCRA Class Action Lawsuit.

In Paramount’s case, the court found that the one-sentence certification included in its form, “if not part of the statutorily permitted authorization, was closely related to it, and would similarly serve to focus the consumer’s attention on the disclosure.” The court found that Paramount’s disclosure did not strictly comply with the FCRA’s requirement, but stated that “it is not plausible that Paramount acted in reckless disregard of requirements of the FCRA by using this language.”

Is this the end of FCRA lawsuits? I doubt it, but there is hope that courts may be lenient to employers for specific verbiage FCRA violations. Keeping your HR department out of the courtroom can certainly feel like a challenge. At Justifacts, we make it easy to comply with the FCRA. Our web-based systems including Justiweb and Applicant Portal create a workflow that keeps your organization FCRA compliant.


It is important to note that Justifacts is providing this information as a service to our clients. None of the information contained herein should be construed as legal advice, nor is Justifacts engaged to provide legal advice. We go to great lengths to make sure our information is accurate and useful. We recommend you consult your attorney or legal department if you want assurance that our information, and your interpretation of it, is appropriate to your particular situation.


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