As you well know, employers are frequently faced with class-action lawsuits brought by current or former employees. There has been an uptick in suits claiming violations of state and federal background check laws, and these would also be for seemingly minor technical errors.
In a rare ruling, a California Court of Appeal recently delivered good news for employers. The court affirmed a decision to dismiss a former employee’s class action, claiming a convenience store chain’s background check forms were defective.
The court did not actually decide the forms were defective, but dismissed the case because the worker could not show he suffered harm or injury. This is significant. The decision could reduce class actions that simply assert technical violations unaccompanied by any harm to consumers or employees.
THE CASE
Involved in the hiring process for Circle K Stores, Ernesto Limon received a set of disclosure forms and authorized the store to conduct a background check. Limon was hired with no background check issue. But no matter, after his employment ended, he sued Circle K for alleged violations of the Fair Credit Reporting Act (FCRA).
The FCRA requires employers to provide a “clear and conspicuous disclosure,” which cannot be combined with other documents or contain irrelevant information. Limon alleged Circle K violated this provision. The federal court dismissed his claims, stating he failed to establish actual harm as a result of Circle K’s alleged technical violations.
Limon re-filed his claim in state court, and California also dismissed the case on similar grounds. This decision was a rarity, as California state courts have historically permitted such claims to proceed based on statutory violations alone, even without the worker showing harm or injury.
The court determined holding Circle K liable for a violation that caused no injury would not align with the act’s purpose.
IN CONCLUSION
This decision provides California employers with a helpful defense against similar claims. California or not, it’s important to have your background check disclosure and authorization forms reviewed by legal counsel, even forms that are supplied by your background check vendor. This is the most effective way to avoid similar claims. In addition, multistate employers should note background check laws vary significantly from state to state, with additional steps necessary than what is required under the FCRA.