Businesses should check their background check consent forms and their pre-adverse action waiting periods, after a recent federal court decision. In Reardon v. Closetmaid Corporation, the district court granted summary judgment in favor of a class of more than 1,800 job applicants. The Court ruled that the employer’s consent and disclosure form was improper because it contained a waiver of liability, even though the inclusion of such waiver language is commonplace. The Court also granted summary judgment to a subclass of job applicants who were properly sent a pre-adverse action notification form, as required under the FCRA, but whose applications were then denied within fewer days than what this Court considered a “reasonable time period.” Because the Court also determined that the employer’s background check procedures were unreasonable, the company faces statutory liability of $100 to $1,000 per applicant, plus punitive damages and attorneys’ fees. Yet, there is no indication that any of the class members suffered any injury whatsoever. As a result, cautious employers should consider removing from their consent and disclosure forms any waiver language, and implementing an internal policy of waiting five business days between sending a pre-adverse action notice and taking any adverse action.
Background Check Forms Face Increased Scrutiny in Federal Court
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