February 25, 2025
An insurance provider has filed a complaint with an Illinois-based federal court. According to the provider, their policies do not cover the employer facing a lawsuit for alleged Fair Credit Reporting Act (FCRA) violations.
The insurer pointed to multiple policy exclusions claiming they exclude coverage of the alleged violations in the company’s handling of the background check process. As such, they stated that the company supplying uniformed security officers had general liability coverage only. This policy covered only bodily injuries or property damage. The insurer claimed that the nature of the alleged violations did not qualify for the insurer’s policies. This case did not involve property or physical injuries.
According to the lawsuit, the company that supplies uniformed security officers intentionally violated the FCRA. The claims against the employer pointed out how the company policy excluded the intentionality of expected injuries. The insurance company also stated that the general liability policy did not cover the exemplary and punitive damages demanded by the employer. Finally, the insurance company stressed the limitations of the employer’s demands. The employer intentionally used a consent form that violated the FCRA.
Furthermore, the insurance company argued against the payment responsibility due to the employer’s intentional transgression. Typically, statutory damages under the FCRA for willful violations capped at $1,000. The insurance company emphasized that it held no responsibility for covering the amount due if the courts found the employer had willfully violated the FCRA.
This emphasis is why the insurance would not cover the amount due to the policy’s deductible. Additionally, the employer’s policy has an exclusion for violations of ordinances or statutes. Therefore, it would not cover the employer if they violated statutes or ordinances.
More details surfaced from the plaintiff in the lawsuit that led to the insurance company’s case. When he applied for a job with the security services provider, he received a conditional offer of employment contingent on a background check. According to the lawsuit, the completed background check included sealed and expunged information. It also provided inaccurate and outdated information. That suit argued that the background check is a consumer report and must comply with the FCRA. This lawsuit eventually escalated into revealing the intentional FCRA violations, which led to the insurance company’s involvement.
The FCRA has many requirements that employers must comply with when conducting background checks, and failure to do so can be costly. This case shows how important it is for businesses to maintain compliance with the FCRA and other regulations. One way to succeed is by partnering with an experienced background check provider. The right partner can help ensure compliance with all relevant laws during background screenings.
Keep your business compliant with new laws and regulations with JDP’s reliable background checks. Contact a sales rep today.