The federal Fair Credit Reporting Act (FCRA) provides protections for persons subject to “consumer reports” provided by third parties, including criminal background and credit checks mandated by employers. The employee or applicant must authorize the report in advance, and if it results in an adverse action such as denial of employment, the subject must be given a copy of the report, as well as an opportunity to dispute the accuracy of its findings. On September 10, the Third Circuit Court of Appeals reversed dismissal of a class action claim brought under FCRA against an employer that did not provide the reports in a circumstance where no one questioned their accuracy.

In Long v. S.E. Penn Transp. Auth., a number of applicants were denied jobs based on the results of drug convictions uncovered as a result of the criminal background checks performed by the employer. While the applicants authorized the checks in advance, they allege that they were only told that their criminal history disqualified them from the jobs, without being provided with copies of the actual results or information regarding their rights to contest this information. The trial court dismissed the claim on the basis that this was only a procedural violation because the applicants did not contest the accuracy of the background check results.

The Third Circuit disagreed, remanding the case for further class certification proceedings. The court concluded that FCRA’s notice provision protects applicants and employees beyond their ability to contest inaccurate information. For example, by giving workers information about the disqualifying convictions, they can contend that the circumstances of the conviction should not result in disqualification. Therefore, failure to provide the report creates more than a procedural violation because it can impact the fairness of how employers use even accurate information.

Employers using third-party background check services should carefully review those providers’ documents and procedures to make certain that all FCRA rights are observed. The agreement with the vendor should contain representations and indemnities with regard to its FCRA compliance obligations. Even if the vendor is at fault by failing to provide the notices, the employer bears responsibility under FCRA for the violation.