Employers in Michigan and surrounding states conducting background reports on job applicants received a favorable decision from the Sixth Circuit Court of Appeals when it comes to limiting liability for claims under the Fair Credit Reporting Act (FCRA). The decision was issued on February 18, 2016, in the case Rocheleau v. Elder Living Constr., LLC (2/18/16). In that case, an applicant asserted a prospective employer improperly obtained a background report, and a third-party screening provider wrongfully disseminated it. As explained below, the statute of limitations ultimately barred the claim.
The Fair Credit Reporting Act
One of the purposes of the FCRA is to promote “the accuracy, fairness, and privacy of information in the files of consumer reporting agencies.” It also provides consumers with rights related to the way their information can be obtained and used. Concerning job applicants, before a report may be shared with an employer or potential employer the FCRA requires written consent from the applicant.
Also, employers must provide certain notices to job applicants before making adverse employment decisions based to any degree on information obtained from a consumer reporting agency. The FCRA’s “statute of limitations requires claims to be commenced no later than two years after the date of discovery of the violation that is the basis of liability, or five years after the date on which the violation occurs—whichever date falls earlier.”
Plaintiff Waits to Long to File his Fair Credit Reporting Lawsuit
On Sept. 15, 2011, Elder Living ordered a background report of the plaintiff in conjunction with his employment application. A search revealed four criminal convictions associated with his name and date of birth. In September 2011, the plaintiff received three notices from the screening provider. These notices included a copy of the report and explained that information obtained in the report may adversely affect his employment status and informing him that he was not selected for employment based at least in part on the information collected in the report.
Importantly, the notices also included a mandatory three-step dispute resolution process for challenging the accuracy of the information contained in the report. But Plaintiff did not contest the accuracy of the report. Instead, he called the screening provider several times in September 2011 and complained that he had not authorized the release of his information.
In November 2013, Plaintiff filed his complaint asserting that his background report was obtained and distributed in September 2011 violated the FCRA. But the U.S. District Court for the Eastern District of Michigan granted summary judgment to the companies, finding that plaintiff’s claims were time-barred. The Court of Appeals agreed with the trial court.
In reaching this decision, the Court rejected the plaintiff’s argument that the companies’ alleged failure to follow a mandatory three-step resolution process tolled the limitations period because it applied only to disputes about the accuracy and completeness of the information contained in the report. Specifically,
At no point has [plaintiff] disputed the ‘completeness or accuracy’ of his background report, either on appeal, in his district court filings, or in his many communications with LexisNexis. Because [plaintiff] has not contested the accuracy of his credit report, the district court properly concluded that [the] dispute process ‘has no relevance to this action and does not affect the applicable statute of limitations in any way.’ Accordingly, his claims were time- barred.
In other words, the conflict resolution process exclusively applied to disputes about the completeness or accuracy of information provided to a consumer reporting agency and plaintiff didn’t contest the accuracy of his credit report.
First, employers routinely conduct background checks on job applicants. But compliance or understanding with statutes applicable to conducting background checks is not regularly followed or understood — by either employers or job applicants. The above case perfectly illustrates this point. In fact, in working with companies to implement HR best practices for complying with employment laws and regulations, we almost always need to address the employment application process to some degree.
Second, we wrote earlier this week about the importance of understanding the applicable statute of limitations when it comes to employment discrimination and related lawsuits. See Whistleblower Protection – Not So Much if You Ignore the Time for Filing the Claim. The bottom line, procrastination can be fatal for employees or a gift wrapped in a pretty bow for employers.
For more information about conducting employment background checks and best practices for conducting employee job screenings, contact employment attorney Jason Shinn.