Uber Suit Highlights Risk of Pre-Employment Background Checks

September 16, 2015
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Uber Suit Highlights Risk of Pre-Employment Background Checks

The number of lawsuits against Uber, Inc. appears to be growing almost as quickly as the company’s app-based car service. The latest lawsuit involves the company’s use of pre-employment background checks. The proposed class action suit, which was filed in New Jersey federal court, alleges that Uber violated the Fair Credit Reporting Act (FCRA) by denying applicants the opportunity to dispute the information contained in the reports of their pre-employment background checks. The company is facing similar suits in California.

Cuccinello v. Uber

According to the complaint in Cuccinello v. Uber, Uber contracted with consumer reporting agency Hirease Inc. to obtain background reports on prospective drivers in order to conduct thorough pre-employment background checks. The plaintiffs, Joseph Cuccinello and James Brooks, allege that they were denied employment based on the content of their reports, but were never provided with copies of the reports or given the opportunity to dispute information contained in their criminal, financial and employment histories. The suit further alleges that the online forms in which they consented to the background checks “unlawfully attempted to obtain future protection for defendants for any unlawful actions, and included other limitations on consumer protections and other extraneous language.”

FCRA vs. Businesses

As we have discussed in prior posts, the FCRA has consistently been a litigation trap for unwary businesses. The federal statute imposes several requirements on employers who wish to conduct pre-employment background checks on job applicants, such as obtaining credit reports and criminal records. Among other legal requirements under the FCRA, employers must notify applicants that they might use information in their consumer report for decisions related to their employment and obtain written authorization to obtain the reports. This written disclosure must be in a stand-alone format separate from the job application and not contain any other content, although it may be contained with the authorization. Prior to rejecting a job application (or taking any other adverse employment action) based on information found in these pre-employment background checks, employers must give the applicant or employee a notice that includes a copy of the consumer report the employer relied on to make the decision, as well as a copy of A Summary of Your Rights Under the Fair Credit Reporting Act. As highlighted by the Uber suit, the failure to take the above compliance steps can result in a costly lawsuit. The FCRA authorizes statutory damages of up to $1,000 per class member as well as punitive damages, actual damages and attorney’s fees. Accordingly, it is wise to review your FCRA compliance, particularly with respect to online applications.