Employer Prevails in Background Check Class Action Under the FCRA

Employer Prevails in Background Check Class Action Under the FCRA

On April 15, 2019, a California court of appeal in an unpublished decision in Culberson v. Walt Disney Parks and Resorts affirmed a summary judgment in favor of an employer in a class action lawsuit alleging willful violations of the federal Fair Credit Reporting Act. The FCRA requires a prospective employer to disclose to a job applicant, in a standalone document, that it may obtain a consumer report for employment purposes and to provide him or her with a “pre-adverse-action notice” that includes a copy of the report and a description of his rights under the law before taking any adverse action based on a consumer report.

The Culberson court first held that at the time of the employer’s disclosure, no judicial or Federal Trade Commission decision existed that specified the precise requirements of “the standalone disclosure requirement” of the FCRA that would have put the employer on notice of alleged violations of the law and accordingly, “no reasonable trier of fact could find that (the employer) willfully violated the Act.”

In regard to the FCRA’s requirement that prospective employers provide job applicants with notice before taking any adverse action based on a consumer report, the Culberson court noted that the letter provided to the plaintiff-applicants stated that the employer’s decision to revoke the conditional offer of employment was “subject to” a successful dispute of the consumer report and gave the applicant time to do so. Noting that the conditional language used in the letter “did not constitute an adverse action,” the Culberson court concluded that “regardless of whether respondent’s conduct violated the FCRA, there is no triable issue whether any violation of the FCRA’s pre-adverse-action notice requirement was willful.”