Kaiser Foundation Hospitals FCRA $4M Class Action Settlement

Kaiser Foundation Hospitals or Kaiser Foundation Health Plan (“Kaiser”) have agreed to pay more than $4 million as part of a settlement resolving a class action lawsuit claiming a failure to use Fair Credit Reporting Act (“FCRA”)-compliant disclosure forms prior to obtaining background checks for employment purposes. Kaiser denies wrongdoing and denies violating applicable law.

Sanders v. Kaiser Foundation Hospitals is one of the latest class action lawsuits related to alleged failure to provide proper disclosures when running background checks on candidates. We recently covered similar allegations, such as Melikyan v. Amazon in 2021 and Nunley v. Cardinal Logistics Management Corporation in 2022.

Summary of Complaint

Sanders (“Plaintiff”), in a recent class action lawsuit, alleged that Kaiser (“Defendants”) “acquired consumer, investigative consumer, and/or consumer credit reports to conduct background checks on Plaintiff and other prospective current and former applicants for employment purposes without providing proper disclosures and obtaining proper authorization.” Plaintiff claimed that Kaiser allegedly violated the following laws:

• Fair Credit Reporting Act (“FCRA”);

• California Investigative Consumer Reporting Agencies Act (“ICRAA”);

• California Consumer Credit Reporting Agencies Act (“CCRAA”); and

• California Unfair Competition Law (“CUCL”).

Kaiser denies that it violated the above laws but has agreed to the settlement. The final hearing was scheduled to be held on September 21, 2023.

Guidelines For Disclosures

Under the FCRA, a person who obtains a consumer report for employment purposes must, in “a clear and conspicuous disclosure” and “in a document that consists solely of the disclosure,” notify the consumer in writing that a consumer report may be obtained for employment purposes. The consumer also must authorize the procurement of the report by the person before the person procures such report.

Employers should consult with their legal counsel to ensure their background screening practices comply with the FCRA and other applicable laws.