Employers paid out $174M to resolve background-check lawsuits

Dive Brief:

In the past decade, employers resolving class-action lawsuits over alleged background check violations paid out a total of $174 million, a new compilation of court records showed.
The companies that provided those reports to employers paid another $152 million when they were sued directly by individuals for allegedly violating the Fair Credit and Reporting Act (FCRA), according to Good Jobs First, the non-profit that compiled the report.
According to Good Jobs First, 40 employers have paid out $1 million or more in FCRA employment settlements since 2011. The database includes settlements involving Wells Fargo ($12 million), Target ($8.5 million), Uber Technologies ($7.5 million), Publix Super Markets ($6.8 million), Amazon.com ($5 million), Home Depot ($3 million), and Domino's Pizza ($2.5 million). The dollar amounts were compiled from 146 successful class actions.

Dive Insight:

The FCRA may not be at the top of the list of mandates HR professionals are tracking compared to discrimination or sexual harassment legislation, but it still carries risks. With hiring occurring regularly and many employers admitting that they don't do regular screenings, the risk of violating the law — and making poor hiring decisions — can't be ignored. And the payouts for violations, per Good Jobs First's data, are worth noting.

More than 90% of employers conduct background checks, mostly during the pre-employment stage, according to a survey released by the Society for Human Resource Management earlier this year. Fifteen percent of the 6,500 HR professionals surveyed said they rescreen workers annually, 13% perform checks after specific events, 10% do them when an employee changes roles and 4% do them on a rolling basis. That's a lot of background checks.

Experts say employers commonly run afoul of background check rules when negative information pops up during a background check. To avoid common pitfalls in this area experts recommend employers regularly audit their background check forms to spot problem areas and train managers and supervisors on compliance with applicable laws like the FCRA.