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Employers Beware of FCRA Based Class Action Lawsuits due to Technical Violations

 As a small-business owner or Human Resources manager of a large corporation, your job is to ensure the safety of your personnel while also finding a new-hire who has the qualifications of filling a position you have available. Gone are the days of simply having a potential employee fill out an application and then check a few references regarding his or her tenure with a previous employee. Things have gotten a bit more complicated these days, but only in an effort to ensure that both employee and employer's rights are not infringed upon.

According to "," a myriad of class action lawsuits are caused by technical violations of the FCRA, (Fair Credit Reporting Act). One of the most common violations is failure to provide a Compliant Disclosure Form to the applicant. This form explains what was disclosed in a consumer report or background check on the potential employee and the reason the employer decided not to hire the applicant. As an employer, if you do not hire an applicant or terminate an employee based on what is disclosed in the background check, you can be liable for any number of punitive damages in a court of law.

*"SHAMECA S. ROBERTSON v. ALLIED SOLUTIONS, LLC, the U.S. Court of Appeals for the Seventh Circuit concluded: Based on information discovered in a background check, Allied rescinded Robertson's job offer without furnishing Robertson a copy of that report on which it relied. By failing to do so, Allied deprived her of the chance to review it and present her side of the story. That is the very reason why the FCRA obligates employers to produce a copy of the report before taking adverse action."

As a business owner or hiring manager, there are steps you can take to prevent a class-action lawsuit due to an FCRA technicality by following a few simple steps:

Compliant Disclosure Form: This form must be straight-forward and indicated as being a Stand-Alone Document. The applicant must sign the form and must completely understand that a background check is being performed on them.

Adverse Action Process: If an employer decides not to hire an applicant based on information in the consumer report or background check, a Pre-Adverse Action Letter must be mailed to the applicant with a written summary of the findings, followed up by an Adverse Action Letter stating the adverse action found so the applicant will be given time to dispute the findings if necessary. A copy of the applicant's rights under the FCRA must also be given to the applicant or employee as well.

An FCRA based class action lawsuit is easily avoided when you have professional people who have current knowledge of employment laws on the local, state and federal levels. Stellaris Group in Roswell is a full-service Human Resource Management Company that keeps your company in compliance in all areas of Human Resources from the private sector to government rules and regulations.



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