Recent Lawsuit Spotlights Adverse Action and Adjudication Practices

In a complaint filed in February against a nationwide retailer, the plaintiff alleged an employee at the company texted him the following without providing a copy of his background report or his rights under the FCRA:

Hi [plaintiff]. Unfortunately your background check did not pass. I don’t know what goes into the decision so I can’t give you specifics. But I really appreciate your time because I know it took forever. I wish you the best.

As further alleged in the complaint, the background report included a felony conviction that did not belong to the plaintiff. The argument essentially claims that by not following the adverse action process, he was unable to review and correct the report. Had he been able to do so, he may have been eligible for the position.

The complaint also references the adjudication practices employed by the employer and Consumer Reporting Agency (CRA) that prepared the report noting that the CRA applied a “Review in Progress” score to the plaintiff’s report claiming it is a “pseudonym for ‘ineligible for employment.'” As alleged in the complaint, when an employee sees this score, they do not conduct any further review of the report. Further, the CRA then generates a pre-adverse action letter based on the score without the employer taking an action to review the report. In the plaintiff’s case, he claims he received the text message from the employer without receiving the pre-adverse action notice.

This complaint also mentions a prior lawsuit the retailer faced that involved “nearly identical violations of the FCRA” claiming the settlement “apparently caused no substantive changes in the way in which [the employer] uses background checks in the employment context.”

Employers are encouraged to review this case with their legal counsel to evaluate their adverse action processes, staff training and adjudication criteria.