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.
Supreme Court and Title VII: Implications for Reverse Discrimination
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Businesses Are Facing Financial Headwinds—A Practical Guide
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
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