Kmart Settles FCRA Class Action for $3,000,000

Are FCRA compliance laws being followed by your hiring managers, recruiters, or even yourself? Really? Let's face it, many very smart HR professionals assume they are compliant in their applicant screening processes because nobody has told them otherwise, and nothing consequential has happened...yet.  HR professionals wear a lot of hats and can't be on top of every changing law in every field they deal with day in and day out.
Kmart's HR personnel assumed they were compliant in their screening processes.  Yet this well respected retailer has been hit by a class action lawsuit for allegedly not abiding by the rules of the Fair Credit Reporting Act.

It's important to understand that there is a growing trend of class action attorneys actively seeking out missteps in the actions of hiring managers and recruiters for corporations viewed as having deep pockets.  In Kmart's case it was alleged that at least 64,500 applicants were affected by being denied their rights (actually the right to know what their rights were) when the company allegedly failed to provide "pre-adverse action" letters prior to declining employment to individuals that that were passed over due to the results of their background checks.  While that original reasoning for the class action lawsuit proved tough to prove, the class action attorneys were able to argue that the pre-adverse action forms used by Kmart had not been updated with required information regarding a simple change of contact data replacing the Federal Trade Commission (FTC) with the Consumer Financial Protection Bureau CFPB.  This change of contact information for the new enforcement agency of the FCRA was recently put into effect.  Officially Jan 1, 2013.

While Sears Holding Corp. has not admitted any wrong doing in this case, they have agreed to settle for three million dollars to avoid potentially costlier litigation.

According to the Kmart class action lawsuit, “Defendants knew or should have known about their legal obligations under the FCRA. These obligations are well-established in the plain language of the FCRA and in the promulgations of the Federal Trade Commission,”

THE BOTTOM LINE
F.C.R.A. compliance doesn't need be difficult or time consuming if two basic conditions apply.
1)  You work with a reputable screening company that offers you easy to use compliance tools and free training to those that utilize background checks.
2)  A consistent (and enforced) company policy exists that addresses the hiring managers role in F.C.R.A. compliance and assistance. Specifics of their role should be provided by your applicant screening company.
Keep in mind, while a reputable background screening provider will handle many aspects of F.C.R.A. compliance and send you compliance training materials, that does not mean that your hiring managers procedures are in (or know how to be) in compliance. Simple steps must be taking for BEFORE an applicant is rejected in part or entirely due to the results of a background check.  Request training sessions from your screening provider for each hiring manager or recruiter. Thirty minutes of training can save millions of dollars in settlement costs!

Pitt v. K-Mart Corp., Case No. 11-cv-00697, U.S. District Court for the Eastern District of Virginia

About the author:

Brad Jones is President of Background Screening Consultants LLC (DBA SafeScreener.com), an applicant background screening agency in Chicago. Brad has worked with hundreds of corporations, nonprofit organizations, and government agencies to establish FCRA compliant applicant screening protocols since 1996. Prior to being fully engaged with the background screening industry, Brad specialized in fraud investigations and complex due diligence related to corporate acquisitions. Brad is an active member of the National Association of Professional Background Screeners as well as a Chicagoland Chamber of Commerce member, serving on the Health and Wellness Coalition as well as the Workplace Well-Being Committee.  Brad can be reached at bjones@safescreener.com or 312.985.5010 x113

Please note: Any person or entity utilizing a third party to conduct applicant background checks for employment or leasing purposes must follow applicable federal and state laws including but not limited to EEOC Title VII, the Fair Credit Reporting Act and all applicable state laws.  Articles, blogs, newsletter and other materials issued by Brad Jones or any employee of Background Screening Consultants LLC (DBA SafeScreener.com) should not be regarded as, or substituted for, legal advice.