July 15, 2024
A major healthcare network has reached a settlement agreement with plaintiffs in a class action lawsuit. This settlement addressed allegations that the employer had performed background checks in violation of the Fair Credit Reporting Act (FCRA). Furthermore, it will set aside a settlement fund of $420,566 to benefit affected class members.
This case concerned allegations that the employer committed multiple violations of the FCRA. On June 7, 2021, the named plaintiff filed a class action complaint in the District Court for the Western District of Tennessee. One of the complaints concerned how the employer obtained and used consumer reports. According to the plaintiff, the employer acquired them for employment-related purposes without a lawful disclosure from class members.
The plaintiff also alleged that the employer disqualified them and others inappropriately. One included example is the failure to provide a notice of intent to take adverse action. The FCRA requires employers to provide this notice when taking adverse action based on information found in consumer reports.
The FCRA creates several disclosure requirements for employers using background screening reports acquired for prospective employees. For example, employers must present the appropriate disclosure before obtaining a background check. This disclosure explains the employer’s intent to get a background report. Before running the check, they must receive written authorization from the involved individual agreeing to the acquisition and usage of the report.
Another example concerns adverse actions. In such cases, employers must provide a pre-adverse action notice due to information revealed in a background report. This notice explains that the employer decided not to hire the individual, as shown in the report’s results. It must also include a copy of the report for the individual to review. Finally, the FCRA requires the individual to receive adequate time to review and dispute the report’s accuracy before the adverse action.
On June 20, 2023, the parties involved in this FCRA suit entered mediation after several negotiations. At this stage, they reached an agreement for the court to consider. The final approval hearing will take place on September 19, 2024.
According to the settlement agreement, two distinct classes will receive payments. One class is the disclosure class: those who applied with the employer and had a background check performed between June 7, 2019, and August 8, 2022. The second is the pre-adverse action class: those the employer did not hire due to a background check or failure to meet hiring criteria.