This calendar year has produced an alarming trend in employment litigation to which employers should pay particular attention – a boom in the number of class action lawsuits filed under the Fair Credit Reporting Act (FCRA) based on allegations of improperly conducted applicant/employee background checks. These lawsuits have resulted in several multi-million dollar settlements, not to mention the dramatic legal fees and costs associated with defending any class action. Thus, all employers should develop a familiarity with FCRA requirements and implement FCRA compliant background screening policies and procedures in order to prevent costly litigation and provide a defense in the event of litigation.

Many employers utilize some form of background and credit checks as part of their screening and hiring process. This process can be as simple as in-house internet searches or applicant questionnaires, but about half of American employers use more in-depth information from a third-party Credit or Consumer Reporting Agency ("CRA"). CRAs such as Equifax, TransUnion, and Experian can create comprehensive consumer reports about everything from creditworthiness to criminal records.