3 Lessons from Domino’s Employee Background Check Lawsuit

EMPLOYEE BACKGROUND CHECKS

Do you remember a time when most employee background check lawsuits were because an organization did not conduct a background check?  And the employee did something harmful. Today more than 90% of companies claim they conduct background checks on new employees.  That sounds great but we know there is no standard of care for what constitutes a background check but that is food for another article.

The proliferation in background screening is creating a large volume of case law.  The courts are making it clear that it is not enough to be conducting criminal background checks but that employers must be conducting legally compliant background checks.

The EEOC has made it a priority to go after employers who are using arrest records to deny employment or who have zero tolerance policies for criminal records.  Pepsi Company learned this the hard way.

States are restricting the reporting of criminal records of credit information.  So it only makes sense there will be increased scrutiny on compliance with the Fair Credit Reporting Act.

Let’s take a look at the recent Domino’s Pizza class action lawsuit.  The lawsuit alleges that Domino’s did not obtain proper authorization before conducting background checks and did not share any adverse information with employees before firing them.  The lawsuit also claimed that the consent for the authorization form was not separate from the application.

There are 3 lessons we can learn from the Domino’s employee background check lawsuit:

• Disclosure & Authorization.  The federal Fair Credit Reporting Act requires employers to provide a disclosure statement about background checks to candidates and obtain a written or electronic authorization before conducting the background check.

• Pre-Adverse & Adverse Action.  The FCRA requires employers to follow a 2 step process when denying employment “based in whole or part” or a background check report.  First, they must issue a Pre-Adverse Action Letter which includes a copy of the background screening report and FCRA Summary of Consumer Rights.  The applicant has a right to see what might be used against them and dispute any information that is in error.  Second, the employer issues an Adverse Action Letter a minimum of 5 business days after the Pre-Adverse Action Letter if there is not a dispute.

• Consent Separate from Application.  The FCRA requires that the Disclosure/Authorization be a separate from the application.  The FTC does not want an applicant to sign away their rights without realizing what they are signing.  So if your authorization form is part of your application, remove it.  Make it a stand-alone document.

The allegations in the Domino lawsuit are nothing new.  These are simple FCRA requirements that must be followed.

If your background screening partner has not assisted you with FCRA compliance, then they have left you vulnerable to a similar lawsuit.  Contact us today for more information on FCRA compliance.