Not too long ago, employers interested in recruiting a potential employee would do background or reference checks without telling the individual. The reasoning was an employer could avoid explaining why a job offer wasn’t made due to something negative turning up in the report.

Retail giant Walmart faces a lawsuit alleging the company violated the Fair Credit Reporting Act (FCRA) by using unauthorized background checks. The lead plaintiff alleges that Walmart obtained a background check on him without legal authorization under the FCRA and California state law while working for the company.

The plaintiff argues Walmart failed to provide adequate notice of the consumer report as well as failed to secure legal authorization to obtain it.

If a third-party vendor such as GroupOne is used, the FCRA specifies that an “Adverse Action Notice” must be sent to the job candidate. It states, “If a company denies an applicant work based on findings in a report, notification of the decision must be given to the potential hire so they can dispute any inaccurate information.”

Approaches have changed dramatically over the years. No longer can an employer carry out a background and reference check without a candidate’s or employee’s knowledge. Of course, the nature of the employment marketplace has changed, as well.

The plaintiff says that Walmart did not provide a “clear and conspicuous” disclosure notifying job seekers that it would be obtaining a consumer report on them. The plaintiff further alleges that the disclosures were “embedded with extraneous information” and were “not clear and unambiguous disclosures in stand-alone documents.”

Most (but not all) employers must obtain written consent from the prospective candidates before starting a background or reference check. Before any of that can take place, the candidate must give his expressed permission for anything to be verified or checked. Remember, always obtain permission in writing!