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Staffing Companies Hit with Class Action Alleging Violation of Fair Credit Reporting Act

Written by Gauri Punjabi

Fair Credit Reporting Act class actions remain on the rise.  The latest one of note was recently filed in Maryland federal court against staffing agencies Aerotek, Inc. and Allegis Group, Inc., alleging that they violated the FCRA after they fired an employee without providing him with advance notice and an opportunity to dispute certain criminal history information identified on a background report.

Under the FCRA, employers cannot take an adverse employment action based on information contained in a consumer report or background report provided by a consumer reporting agency without first providing the applicant or employee with a notice of its intent to take the adverse action and the opportunity for the applicant or employee to contest the information contained in the report.  Violations of the FCRA can include statutory damages ranging from $100 to $1,000 per violation, actual damages, punitive damages, attorneys’ fees and costs.

According to the Complaint, while Aerotek notified Mitchell on November 30, 2012 that he was ineligible to continue working in his position as a result of the crimes listed in his background report, it did not provide him with its “Notice of Intent to Take Adverse Action” until December 3, 2012, well after the adverse action had taken place.  Mitchell subsequently demonstrated that he had never been arrested or charged with any crime and had no criminal history and consequently, the consumer reporting agency that had sold Aerotek and Allegis the background report containing the criminal history information corrected the report.

Staffing agencies should be paying close attention to this case – particularly those that routinely hire hundreds, if not thousands, of employees each year to meet their clients’ staffing needs – because FCRA violations can quickly add up and become costly.  All employers should also be mindful that many states have additional notice requirements similar to the FCRA that they need to comply with as well.

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