FCRA review of HR procedures
If Starbucks can run afoul of the Fair Credit Reporting Act (FCRA), your company can as well if an audit of your processes and procedures relating to background investigations are not conducted on a periodic basis. There are two pending class action lawsuits that claim Starbucks violated the FCRA by allegedly failing to provide job applicants with pre-adverse and adverse action notifications of their intent to deny employment, supplying a copy of the background check report and a Summary of Your Rights Under the FCRA, https://files.consumerfinance.gov/f/201410_cfpb_summary_your-rights-under-fcra.pdf and failure to provide a meaningful opportunity for the candidate to dispute and correct any errors before denying employment.
One plaintiff, was denied an opportunity at Starbucks when a background check incorrectly attributed crimes to the plaintiff that were committed by his brother who had stolen his identity. Although the plaintiff supplied a corrected report indicating that he was not the individual in the record that was developed, Starbucks never rescinded its adverse action. The plaintiff alleges that he never received a pre-adverse action notice, a copy of his background check report, or a Summary of Your Rights Under the FCRA, a clear violation of federal guidelines when he was denied employment by Starbucks.
A second plaintiff claims that he lost an opportunity to work at Starbucks when a background check developed convictions in Minnesota for a person with the same first name but a different last name. Even though the plaintiff had a different last name and had never been to Minnesota, Starbucks “barred him from working”. This plaintiff asserts that “Starbucks typically does not provide job applicants with a copy of their consumer reports before it takes adverse action against them based on the information in such reports”.
The pre-adverse action and adverse action process is very easy to implement. The following is a brief outline. When an employer determine that an offer of employment will be rescinded “in whole or in part” due to information contained in a background investigation, the employer must:
Inform the candidate of the decision in a pre-adverse action notification
The notification must include a copy of the background investigation, the background vendor’s name and contact information and a copy of the Summary of Your Rights Under the FCRA.
The candidate must be notified that they have the right to dispute inaccurate information contained in the background investigation with the background vendor.
The background vendor must comply with any request for reinvestigation of the report under FCRA guidelines.
The candidate must be given a certain number of days to respond to this notification.
If the candidate fails to respond to this notification and does not request a reinvestigation, the employer must send a second notification to the candidate, which is called an adverse action notification. This notification will state that an offer of employment has been rescinded. An employer must not send an adverse action notification if the background vendor is conducting a reinvestigation of the report. Once a final determination has been made, the employer can send the adverse action notification or continue to onboard the candidate.
In a previous blog, we discussed Human Resources must audit their FCRA practices at all locations to ensure compliance. Starbucks hires over 100,000 people every year. A large number of candidates and Human Resources personnel are involved in this process to be sure. In our previous blog, we discussed that employers with just a single location and particularly those with multiple locations must conduct FCRA audits to ensure that practices and facilities far from the home office are following the proper guidelines. Failure to do so can result in expensive and easily avoided lawsuits.