Background Checks

The Fair Credit Reporting Act (FCRA) requires that employers provide applicants with a clear and conspicuous disclosure, consisting solely of the disclosure, stating that a background check will be obtained. Employers that bundle the disclosure with anything else, no matter how clear the disclosure might be, are setting themselves up for a potential lawsuit.

In July 2015, the United States District Court for the Southern District of California preliminarily approved a $1.75 million class action settlement against the family entertainment chain Chuck E. Cheese’s for its background check practices.

In Ford v. CEC Entertainment, Inc. d/b/a Chuck E. Cheese’s, the plaintiffs alleged Chuck E. Cheese’s background check disclosure form—and therefore the company itself—violated the FCRA. According to the plaintiffs, Chuck E. Cheese’s violated the FCRA by embedding the disclosure within the employment application and by including impermissible materials in the disclosure, including a definition of “at-will” employment, a “correct and complete” certification for the application materials and a liability release.

With an estimated 28,000 members in the class, each plaintiff will receive approximately $38. That’s a small amount per person, but the impact upon Chuck E. Cheese’s bottom line will certainly be noticeable. Chuck E. Cheese’s also made changes to its background check disclosure as part of the proposed settlement.

This settlement is only one of a growing list of multi-million dollar settlements regarding employer background check practices. It should remind every employer that the laws regarding background checks are just as unambiguous as employee disclosures must be. Furthermore, there is no shortage of labor attorneys ready to seek out litigants and take action against companies whose disclosure forms (both paper and electronic) are not clear, conspicuous and unadorned with any other information.

For more information or to discuss an evaluation of your company’s current screening processes, we invite you to give us a call at (765) 932-5917.