Could Your Online Job Application Lead to an FCRA Violation?

In the digital age, it makes sense to post job openings and allow prospective employees to complete a online job application. After all, most job searches are conducted on the Internet.

However, many companies are learning that online job applications can lead to unforeseen liability, particularly when it comes to employee background checks. Dollar General Corp., Publix Super Markets Inc., and Whole Foods Market, Inc. are just a few large retailers that have been targeted by class-action lawsuits alleging violations of the federal Fair Credit Reporting Act (FCRA).

The FCRA imposes several requirements on employers who wish to conduct background checks on job applicants, such as obtaining credit reports and criminal records. Most notably, 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.

The FCRA has consistently been a litigation trap for unwary businesses. However, the Internet has made compliance even more difficult. Michaels Stores, Inc. is currently facing multiple lawsuits overs its use a click-wrap agreement in its online job application. Rather than assent to a separate FCPA disclosure, applicants clicked “I Agree” at the end of the application.

In one suit, the plaintiff contends that the online job application contained so much information that it did not adequately notify applicants that the company would obtain a credit report. The complaint states: “Defendant’s FCRA disclosure and authorization are embedded within an online employment application which appears as one long continuous Web page that applicants fill out, and which contains a liability release, among reams of other extraneous information.”

In another suit, which is pending in New Jersey, the plaintiff alleges that Michaels Stores “neglected to properly inform job applicants that the company regularly performed background checks on potential employees during the application process” in violation of the FCRA and the New Jersey Fair Credit Reporting Act (NJFCRA). The suit seeks damages of up to $1000 for each FCRA and NJFCRA violation.

Last year, Dollar General Corp. and Publix Super Markets Inc. agreed to pay almost $11 million to resolve similar class-action suits. Given the potential for liability (even in the absence of any harm to job applicants), businesses may want to review their online job applications and consult with an experienced business attorney regarding any necessary changes that may be needed to comply with the FCRA.