Next Year's Headache for Employers

Not to ruin the Christmas season, but when you get through the holidays and start focusing again on looming legal issues, you might want to read this article, Lawsuit Raises FCRA Fears, by Kristen Fratsch in Human Resource Executive On Line.

The basis for the lawsuit is a class action suit against Disney, based on alleged failure to notify an applicant that he was not being hired because of a criminal conviction that showed up on a background check. According to the plaintiff's side of the story, the assault occurred when he was 19, was expunged from his record and the credit reporting agency ultimately removed it. Disney has not answered, so it may well have complied with the Fair Credit Reporting Act.

However, according to Fratsch since 2010 there have been been 368 class action lawsuits filed under the FRCA.

In employment law, most  litigation has traditionally involved termination of employment. Which makes sense because in those cases an employee at one time got the job, performed for some period of time, and the employer had to make a conscious decision and carry it out appropriately. Plus, the employee has a vested interest based on his investment in time with his ex-employer and a track record of earnings that will support a damage claim. Not to mention the emotional involvement that comes out of being terminated.

By contrast, hiring claims are not as economically viable. There are lots of applicants for most positions and courts are reluctant to second guess hiring decisions if it seems to be a reasonable choice. Plus applicants generally don't know why they weren't hired, and don't have the emotional level of investment they have when someone has terminated them, plus damages are problematic.

But when you throw in the possibility of a class recovery, with the dollar signs that inevitably follow class litigation, now you have an incentive, not so much for individual employees, but for law firms that focus on class or collective action based employment litigation.

So, for now enjoy the holidays, but in the not too distant future, remind yourself of an employer's obligations under the FCRA and make sure that you are in compliance.