Some of America’s largest employers — including Amazon, Target, Uber and Wells Fargo — have routinely snooped on job applicants’ credit records, legal histories and other personal matters in violation of federal rules, according to a corporate watchdog group. And with such background checks now standard operating procedure for many companies, people could find themselves wrongly denied a job — sometimes based on faulty information — without ever learning why.
The revelations surfaced in a raft of class actions in recent years alleging that big companies improperly conducted background checks while vetting hundreds of thousands of prospective employees, according to Good Jobs First, which tracks corporate misconduct.
The group said this litigation led to employers paying out a total of $174 million over the past decade in settlements. Another $152 million was paid by background-check companies that provided those reports to employers.
Job candidates sued the companies under the employment provisions of the Fair Credit Reporting Act (FCRA), a federal law that seeks to ensure the accuracy, privacy and fairness of information on file with consumer reporting agencies, such as credit bureaus. Contrary to its name, the FCRA covers broad reports that include much more than individuals’ credit information. Their criminal histories and any legal judgements against them also turn up in these kinds of consumer reports.
The right to know they’re checking you
In the suits, plaintiffs claimed employers failed to obtain applicants’ written consent before conducting a background check or didn’t provide the applicant with a copy of the report. Under the law, consumers can challenge the content of those reports if they think the information is inaccurate or unfair.
These kinds of complaints are widespread as more employers, large and small, rely on background checks to vet employees, said employment attorneys.
“It’s ongoing, and it’s getting worse and worse, because in this day and age, more companies are using background checks for employment,” said Mark Mailman, an attorney who specializes in fair credit reporting cases.
“Ten years ago, we didn’t see nearly as many; now, in every walk of life, there is a background check required for hiring and also feedback reviews. We sue background-check companies every day,” Mailman said.
Under the FCRA, employers must provide a worker or job applicant with a written disclosure indicating that the company might obtain a report that includes information on the person’s “character, general reputation, personal characteristics and mode of living.” Employers also must provide a copy of the report to the applicant before taking any action based on its contents.
The right to dispute information
People have a legal right to dispute any information in the report, which typically include credit and criminal histories and driving records, along with other biographical details available in public and private databases.
Employers conduct background checks using information — such as one’s name, date of birth and Social Security number — that job candidates typically provide during the application process. But reports aren’t always accurate.
In one case, Terrell Manuel sued Wells Fargo in 2014, claiming the bank “willfully” neglected to obtain his authorization before obtaining a consumer report on him for employment purposes, and it also failed to give him a copy of his background check report before denying him a job. Wells Fargo ultimately agreed to settle the class action to which Manuel belonged for $12 million. The bank did not respond to a request for comment.
Similar complaints were made by applicants in other lawsuits against Amazon, Target and Uber, among other big corporations.
Amazon in 2018 resolved claims it violated disclosure and authorization requirements under the FCRA with a $5 million settlement, distributed among a class of 454,000 job applicants in the form of gift cards worth up to $150.
The lead plaintiff said he was denied employment at the internet giant based on contents of a background report, but Amazon never provided him with a copy of the report on which the decision was based. “As a result, in violation of the FCRA, Plaintiff was deprived of any opportunity to review the information in the report and discuss it with Defendant before he was denied employment,” the lawsuit reads. Amazon did not reply to a request for comment.
Checking the background checkers
The companies that provided those reports to employers have paid millions in settlements also. Among them was Intellicorp Records, which agreed to an $18.6 million settlement covering more than 100,000 litigants who alleged it provided employers with incorrect, outdated or incomplete information on prospective employees.
“In that this case was settled more than five years ago, we have no further comment at this time,” Intellicorp said in a statement to CBS MoneyWatch.
Background check companies sometimes rely on partial information, like a birth year versus a full birth date, resulting in frequent mix-ups, experts said. “It’s a much harder problem with criminal background reports, because oftentimes there is no date of birth or Social Security number provided,” said Adam G. Singer, a consumer protection lawyer.
“When dealing with public records, often you may just have a first and last name, and possibly an address, and the credit bureaus and background check companies won’t always insist on an exact match,” Singer said.
CoreLogic National, another provider of background check services, allegedly ran reports on candidates without using their dates of birth, increasing the likelihood of cases of mistaken identity. One plaintiff suing the firm accused it of falsely reporting that he had been convicted of a felony, causing him to be denied a job.
“Defendants had mixed the criminal history of a stranger with the same first and last name into the plaintiff’s report, even though that person shared nothing else in common,” according to the complaint. CoreLogic did not respond to a request for comment.
“Very often criminal histories are the type of information employers get, and people lose their jobs or don’t get hired. Often what these cases involve are reports for people with similar or the same names but a different person,” said attorney Martin E. Wolf. He cited the case of a 25-year-old man with a common last name whose report included the criminal history of a 56-year-old with the same name.
Other well-known companies — including AT&T, Costco, FedEx, Home Depot, K-Mart, Publix Super Markets, Sephora and Whole Foods — have all settled similar lawsuits, some for millions of dollars, according to Good Jobs First’s violation tracker.
“There are a lot of instances of people being turned down for jobs based on information that doesn’t apply to them,” said Phil Mattera, research director at Good Jobs First.
Growing litigation over job screening stems from “a combination of employers more frequently using these background checks and also more instances of them breaking the rules or not being aware of the rules,” Mattera said. “Lawyers are seeing an opportunity to bring actions against employers when they don’t abide by the regulations.”