New FCRA Class Action Against UPS Shows Traditional FCRA Claims Alive and Well

Orrick - Employment Law and Litigation
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The federal Fair Credit Reporting Act (FCRA) has created a flurry of class action complaints in recent years aimed at employers who fail to comply with the FCRA’s hyper-technical disclosure and consent requirements. However, a new class action against UPS reminds us that traditional FCRA claims have not faded away and employers should remain mindful of the Act’s requirements.

For context on the current climate, we previously reported a trend of modern claims that focus on application of the FCRA in the ever-evolving context of social media and internet based databases.  Employers have struggled to understand their responsibilities under the FCRA as plaintiffs change their focus from traditional background check compliance to targeting employers’ use of social media accounts and internet search engines. In one case, the plaintiffs alleged that even an employer’s use of LinkedIn violates the FCRA.  In another instance, the plaintiff alleged that he was terminated after his former employer coerced him into signing an admission statement for refund fraud. Even though the plaintiff was not convicted of the crime, his forced admission made its way into a database used by prospective employers.  These are just a sampling of the novel FCRA claims that employers did not anticipate a few years ago.

The U.S. Supreme Court has also faced novel FCRA-related claims targeted at an employer’s use of new technology. In that case, Spokeo, Inc. v. Thomas Robins et al., the plaintiff brought FCRA claims against Spokeo, a “people search engine” that provides information like contact data, marital status, age, occupation, and wealth level, which the plaintiff claimed published inaccurate information about him that caused him psychological harm while he struggled to find work. While the Supreme Court’s focus was on the injury required to maintain a suit for willful violations of the FCRA, and it decided a concrete injury was required, it is clear that employers must carefully review how they use technology to investigate prospective and current employees.

But with the new barrage of technology based FCRA claims, a recent lawsuit against UPS reminds employers to maintain continued vigilance against traditional FCRA background check claims. In a case filed on February 13, 2017, Riley v. United Parcel Service of America, Inc, Case No. 6:17-cv-00254, the plaintiff alleges that in November 2016, UPS offered him a job as a customer service representative, subject to a background check.  Subsequently, on November 14, 2016, UPS notified plaintiff that the company was revoking the offer due to information revealed in the background check report, without ever telling him what the information was or giving him an opportunity to discuss the information.

Thereafter, Riley brought claims under FCRA alleging that that the company failed to provide him a copy of the report, failed to notify him of his rights under the FCRA, and failed to allow him to respond to the information. Riley seeks to represent a proposed class of all UPS “employees and prospective employees in the United States against whom adverse action was taken based, in whole or in part, on information contained in a consumer report” within the last five years.  Plaintiff estimates that the proposed class will include thousands of individuals and seeks damages between $100- $1,000 for each violation, punitive damages, attorney fees and costs.

In conclusion, employers should remain cautious about using information from internet searches and using social media to make hiring decisions. However, this case is a reminder that employers must not only prepare for new theories of liability that arise as a result of changing technology, but that they must also carefully review their existing background check policies to ensure that even traditional background check methods comply with the technicalities of the FCRA.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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