Amazon, Staffing Company Sued Under FCRA

Case raises issue of coordination between employers, staffing firms

By Roy Maurer May 8, 2015
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Online retailer and staffing company Staff Management were hit with a proposed class action in federal court for allegedly failing to provide prospective employees with the results of background checks before making hiring decisions.

Gregory Williams sued the two companies after being rejected for a warehouse job at Amazon in 2013, based on results of a background check conducted by Staff Management. The screen mistakenly reported that he had a felony conviction for cocaine possession. Williams claims that he never received a copy of the report or a summary of rights, a violation of the Fair Credit Reporting Act (FCRA).

The FCRA requires that applicants receive copies of background check reports prior to any negative hiring decisions so that individuals have the opportunity to contact the consumer reporting agency to dispute or explain the findings of the report.

The erroneous cocaine conviction disqualified Williams from the job, and he was never given the opportunity to correct the record, the lawsuit said.

Williams filed suit April 7, 2015, in U.S. District Court in Washington state. The suit seeks class-action status to represent all workers rejected for positions at Amazon over the past five years who did not receive a copy of a background check procured from any consumer reporting agency the retailer used during that time.

“Defendants typically do not provide job applicants with a copy of their consumer reports or a statement of their FCRA rights before they take adverse action against them based on the information in such reports, despite being required to do so by … the FCRA,” the lawsuit said.

“This case is just another in a long line of class-action cases alleging violations of basic FCRA duties,” remarked Les Rosen, an attorney and the CEO of Employment Screening Resources, a background screening firm. “In 2014, an increasing number of FCRA class-action lawsuits were filed and were settled for millions of dollars and several more lawsuits have [since] been filed. FCRA violations can range from not making legally required disclosures to not following proper adverse action procedures,” Rosen said.

Home Depot recently settled a class-action suit for $1.8 million for allegedly violating the FCRA by not having proper background check forms for its job applicants.

The stakes are especially high for large employers, Rosen added. “Allegations of a willful violation of the FCRA can expose an employer to damages from $100 to $1,000 for every person that was the subject of the violation. More importantly, under the FCRA, an allegation of a willful violation can also expose an employer to punitive damages, which can be demonstrated just by a showing that the conduct was objectively unreasonable, even if no malicious intent was present.”

The case also raises important considerations for employers working with staffing agencies and stresses the need for employers to coordinate with staffing providers to ensure that FCRA requirements are being met.

“This lawsuit is a wake-up call to employers that use staffing agencies to place employees,” said Robert Mather, CEO of background check firm “Many employers that we work with have rock solid employment screening practices as well as compliance practices … yet they completely ignore the requirements when it comes to the staffing agencies that they utilize,” he said. Mather advised HR or legal counsel to examine their contracts with staffing agencies and specifically the term “background check.”

“When helping our clients review their staffing agency contracts [we find] the term background check is undefined and allows staffing agencies to use the least expensive background check possible while still fulfilling the legal terms in their contracts for placement. Other staffing clients of ours forgo this methodology and honestly try to get the best background check to protect themselves and their employer clients that they are staffing for.”

Roy Maurer is an online editor/manager for SHRM. Follow him @SHRMRoy

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