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Can I Sue an Employment Background Check Company?

Employment background check companies must abide by federal and state laws when they screen job applicants. Employers rely on the information screening companies provide, which can make or break your job prospects. You may be able to sue an employment screening company if:

  • They violate the Fair Credit Reporting Act (FCRA)
  • They refuse to give you a copy of the report
  • There are background check errors or incorrect information
  • They mishandle your information and you become a victim of identity theft

If you've been a victim of any of the above, you should think about getting a case review from a consumer protection lawyer.

FCRA Violations

The Fair Credit Reporting Act (FCRA) is a federal law enforced by the U.S. Federal Trade Commission (FTC).

According to the FTC, background reports are considered "consumer reports" when they are used for employment purposes. Under the FCRA, a company that sells or provides these reports is called a "consumer reporting agency" subject to the FCRA. That's why an employment background screening company has to follow procedures under FCRA.

The FCRA requires employment screening companies to provide "maximum possible accuracy" about employee-applicants. This means making sure the report doesn't incorrectly incriminate you or otherwise contain wrong information that could harm your chances of obtaining employment.

Screening companies must also make sure their clients (employers) are legitimate and will only use the reports for employment purposes. You, as a prospective employee, must be provided with a notice about your consumer rights under the FCRA, and you have a right to access your files especially if you dispute the accuracy of a report about you.

If an employment background check company has violated any of these procedures, you can sue them under the FCRA.

Refusal to Disclose Background Check Report

By law, you may have a right to the results of your background screening. Many state jurisdictions, such as California, require the background check company to share a copy of the report with you as well.

Under federal law, the FCRA requires that an employment screening company provide you with written notice about the results of an investigation relating to your background. This is to provide you with a reasonable opportunity to correct mistakes or dispute the accuracy of information provided to your employer.

Under both federal law as well as the laws of many states, it's illegal for a background check company to make it difficult for you to obtain information about yourself on a report they provided to an employer. If the company refuses to cooperate with you to share the details of your background check, you may be able to sue under state credit reporting laws as well as the FCRA. For example, in the jurisdiction of the state of California, you can sue under the California Credit Reporting Agencies Act (CCRRA).

Inaccurate Background Checks

Potential employers may withhold or retract your job offer because of:

  • False information
  • Inaccurate information
  • Confusion over similar names

Most common background checks will pull information from public records as well as other consumer reporting agencies like Experian, Transunion, and Equifax. But an employment background check company needs to be careful about the criminal records they pull up. You can lose an employment opportunity if the screening company negligently or intentionally shares negative information about you.

For example, if the screening company tells your prospective employer that you have a criminal background when in fact you don't, they either made a mistake or purposefully made misrepresentations about your criminal history.

Screening companies might also misread a consumer report about your credit and, on top of telling employers that you have criminal charges on your record, they could wrongfully tell them that you were accused of a felony (a serious crime) instead of a misdemeanor (a lighter crime).

Again, you would want to sue under the FCRA and under the local laws of your state. (Unfortunately, in most cases the FCRA will not allow you to sue separately for defamation, which is another claim usually available in cases where someone harms your reputation. You can read more about defamation, libel, and slander on Findlaw.)

Mishandling of Private Information

If a background check company leaked your social security number and other personal information to the public, you may become a victim of identity theft.

Even if your information or identity isn't stolen, you still have a right to privacy. If the screening company mistakenly shares your criminal background check with the wrong people, it could ruin your reputation or violate your privacy. If the results of the background check are intended only for employers, then the screening company must take reasonable care to ensure they don't fall into the wrong hands.

In addition to suing under state consumer privacy laws as well as the FCRA under federal law, you may be able to sue the screening company for negligence for mishandling your private information.

A negligence lawsuit will claim that the employment background check company:

  1. had a duty to safeguard your information because they deal in a business where they are entrusted with sensitive consumer information; and
  2. they breached that duty by mishandling your private data and making it available to the wrong people (whether by mistake, carelessness, or malicious intent); and
  3. their breach caused your information to be compromised; and
  4. you were damaged as a result of the time and money you had to spend to recoup losses (to your identity, reputation, job prospects, etc).

Remedies

If you win your lawsuit against the screening company, the court may award you any one or more of the following remedies:

  • Compensatory Damages - This includes the money you lost from lack of employment, falling victim to identity theft, and money to repair and monitor the damage to your reputation and credit.
  • Statutory Damages - These are awards available under specific state and federal laws. For example, consumers can recover between $100 to $1000 per every FCRA violation. State privacy laws (statutes) may offer additional “flat rate" damages like this.
  • Punitive Damages - These are intended to punish a defendant that acts with malice or fraud. If the employment background check company intentionally leaked your private data or lied to a potential employer to deprive you of work, chances are that a court might order punitive damages against them.
  • Court costs and attorney's fees - Money you spent on court filing fees and attorney billing may be recoverable in some circumstances, especially if the screening company's contract states that a winner of any dispute may collect costs and fees.

Contact a Consumer Protection Attorney

A consumer protection lawyer can provide you with legal advice about taking adverse action against an employment background check company that mishandled your information or cost you a job.

It's important that you consult an attorney because you might not be the only victim. It is not uncommon for big companies that handle sensitive information to fail to safeguard it. Background check companies in particular deal with a lot of private materials, including your address history, social security number, and contact information.

A lawyer may be able to group you with other victims who have suffered privacy violations or job losses as a result of a background check company's negligence. The group can bring a class action lawsuit, which is a kind of case that combines the common claims of multiple victims into one big suit against the screening company. Your attorney can advise you about your rights and whether an individual lawsuit or a class action is the best way to protect them.

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