Costly Settlement for Alleged FCRA Violation

The Fair Credit Reporting Act (FCRA) outlines the fundamental federal requirements for employment background checks done by consumer reporting agencies. No company wants to face the consequences of a violation. But the truth is, sometimes it happens. In those cases, employers may face litigation.

Continued Confusion Over FCRA Disclosures

The requirements of the FCRA can be difficult to navigate.  One of the most confusing, and litigated, requirements for employers under the FCRA are the disclosure and authorization requirements, as we have previously discussed.  We have seen litigation surrounding FCRA-required disclosures in  Gilberg v. California Check Cashing Stores, LLC and Walker v. Fred Meyer, Inc. In February, another company settled after an accusation of similar violations.

The Complaint Against Quantum Global Technologies, LLC

Quantum Global Technologies, a cleaning contractor based in Pennsylvania, found themselves in a tough spot. A former employee filed a class action complaint alleging the company violated the FCRA based on a disclosure form that Quantum used that reportedly included an extraneous liability waiver.

The complaint accused Quantum of requiring all prospective employees to sign a standard form authorizing a third-party background check. Because Quantum’s form included a liability waiver, in addition to a disclosure concerning a consumer report, the class action complaint alleges that Quantum violated the FCRA’s stand-alone disclosure requirement and, as a result, Quantum never received proper authorizations for any reports it obtained using its standard form.  The named plaintiff also claimed that he was confused by Quantum’s standard disclosure and authorization form and did not understand that Quantum would be requesting a consumer report as defined by the FCRA.

Quantum Accepts Penalties

In this case, Quantum and its former employee ended up settling. On February 16, 2021 the settlement was approved by a federal judge. Quantum will pay $174,980 as a class settlement for the alleged violations.

The amount that Quantum has agreed to pay is extensive, but case settlements can certainly exceed this amount. To avoid potential issues, employers should work with their legal advisor to ensure their disclosures meet federal, state, and local requirements.