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Whole Foods Paying the Price for Allegedly Faulty Background Checks

Whole Foods Paying the Price for Allegedly Faulty Background Checks

The Inside Perspective
(April 23, 2014)

Employers are often surprised to learn that the Fair Credit Reporting Act ("FCRA") is the source of rules on the way in which criminal and civil background checks must be done, even when determining a job candidate's credit rating is not the reason for the inquiry. And the FCRA'S rules on how to do these checks are precise, as evidenced by a recent class action lawsuit filed against natural food supermarket Whole Foods, Gezahegne v. Whole Foods Market California, Inc.

TIP:  Review the forms you use to conduct background checks -- even if they are provided by third party vendors -- and be certain that they comply with the FCRA. Small mistakes, when multiplied in a class action, can result in major costs.

Simple, but Significant Mistake
The lawsuit, filed on behalf of thousands of individuals, alleges that Whole Foods made a simple, but significant, mistake when it sought authorization from applicants to secure background checks.

  • A background check (a “consumer report”) may not be procured for employment purposes unless a "clear and conspicuous disclosure" has been made to the applicant before the report is procured, in a document that consists solely of the disclosure that a background check may be obtained for employment purposes, and the applicant has "authorized in writing the procurement of the report." See 15 U.S.C. § 1681b(b)(2)(A) (emphasis added).
  • Whole Foods' online form spelled out the required disclosure and authorization, but it also included a waiver and release of any claims that might arise from the background check. The lawsuit alleges that adding the waiver contravened the statute's requirement that the document "consist solely of the disclosure" and, therefore, the authorization form was invalid.

It remains to be seen whether the court will agree with the plaintiffs' theory but, if so, given the number of individuals allegedly impacted, Whole Foods could be looking at a significant price tag for a seemingly harmless mistake.

Julianna Theall Earp
T (336) 378-5256
F (336) 378-5400
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