Home Depot recently settled a class action lawsuit that alleged Home Depot violated the Fair Credit Reporting Act (FCRA) by including, among other things, a release of liability on the form it used to disclose and authorize the running of a background check.
Under the FCRA, employers are required to provide a notice disclosing that a background check will be run and an authorization to conduct the background check itself. The argument made in the lawsuit is that the disclosure and authorization forms cannot include other language. In this case, Home Depot had additional language on its forms that included a release from lawsuits relating to the information it received from the background checks. The forms also stated that providing false information on the authorization document could be grounds for denial or termination of employment.
The court did not have an opportunity to weigh in on whether having additional language in the disclosure and authorization form was a violation of the law, but the FCRA statute does say the disclosure document should contain “solely” the disclosure. The settlement agreement will impact approximately 120,000 applicants and will cost Home Depot about $3.4 million (Fernandez v. Home Depot, U.S.A., Inc., SD Cal, May 2015, Plaintiff’s Motion).
Tips: Although this is only a settlement, we recommend that your background check disclosure and authorization documents avoid additional language that could expose your company to this type of complaint.
You may still incorporate a release of claims in your hiring process, but a better place for such language is on your employment application. If you use FCRA disclosure and authorization forms provided by a third party background check company, review the language to see whether it should be pared down.
See our Model Form, “Background Checks: Federal Notices (5341),” or contact your Vigilant employment attorney for assistance on this and other employment law concerns.
This website presents general information in nontechnical language. This information is not legal advice. Before applying this information to a specific management decision, consult Vigilant or legal counsel.