Large Online Retailer Settles Suit for FCRA Violation

October 4, 2023

An online retailer recently announced it reached an agreement in a California federal court. This agreement ends a lawsuit with a former associate. According to the case, the associate accused the retailer of illegally using information about a past conviction to deny him a full-time job.

The online retailer did not detail the terms of the agreement. However, it did file a notice stating that it had agreed to settle the lawsuit under the California Fair Chance Act (FCA). The FCA first took effect in January 2018, intending to increase job opportunities for people with criminal records.

The Proposed Class Action

The plaintiff initiated a proposed class action lawsuit against the retailer and a background check company in 2022. According to the company, the plaintiff was arrested and charged with sexual offenses in 2011. Convicted of these crimes, the plaintiff faced five years of imprisonment. After release in 2016, he registered on California’s Megan’s Law website as a sex offender as required. 

The defendant explained that they intended to hire him as a seasonal associate in the latter part of 2021. Though the position should have ended in March of the following year, the company extended an offer to work full-time. This decision led to a third-party company running a background check and revealing his criminal record. As a result, the defendant withdrew the offer.

The plaintiff claimed that the online retailer and the background check company violated Megan’s Law. He alleged that the company used information from the website to deny him employment. In addition, he claimed the company violated the Fair Credit Reporting Act (FCRA) and the Consumer Reporting Agencies Act. This Act bans consumer reporting agencies from reporting convictions in which seven years have passed since the point of parole.

The Court’s Decision

Despite these complaints, U.S. District Judge Fred W. Slaughter granted the defendant’s bid to dismiss the suit in May. However, he also allowed them to amend the claims. The judge explained that the plaintiff failed to adequately prove that the defendant improperly used information on California’s Megan’s Law website. Furthermore, the defendants claimed they acquired the plaintiff’s criminal history from public records.

This case shows the importance of complying with the FCRA and other employment laws. Failure to comply can lead to fines, penalties, and expensive lawsuits. The best way to ensure compliance with all relevant employment laws is to work with an experienced background check company.

JDP helps employers stay compliant and incorporate fair chance hiring practices. Contact a sales rep today.