Domino’s Pizza agrees to pay $2.5M for FCRA violations

Domino’s Pizza has agreed to settle a federal class action lawsuit related to its background screening process for $2.5 million.

The plaintiffs in Adrian Singleton, et al vs. Domino’s Pizza, LLC alleged two significant Fair Credit Reporting Act (FCRA) violations:

• Inclusion of a limitation of liability in its FCRA-required disclosure document.
• Failure to provide a copy of the consumer report and the summary of consumer’s rights under the FCRA prior to taking an adverse action with respect to the individual’s employment.

The FCRA requires that employers make a “clear and conspicuous disclosure” that a background check (they call it a “consumer report”) will be ordered to applicants or employees “in a document that consists solely of the disclosure.” Some employers, often at the direction of their legal counsel who are unfamiliar with the FCRA, include language in the disclosure document releasing the employer from any liability relative to their use of the background check. Documents filed in the lawsuit demonstrate that Domino’s disclosure documents included such a release.

We have been counseling employers for over a decade that this was a bad idea and this settlement reinforces that advice. The document may not contain anything but the disclosure that a consumer report will be ordered and the authorization to do so by the applicant. The Federal Trade Commission has also said that the document can contain the basic information necessary to initiate the background check (date of birth, social security number, etc.). The disclosure and authorization document that Imperative provides our clients meet the FCRA’s requirements.

The FCRA also requires that prior to effecting an employment decision adverse to the interests of the applicant or employee based in whole or part on the background check, the employer must provide the individual a copy of the background check and the document entitled A Summary of Your Rights Under the Fair Credit Reporting Act.  This is often called the pre-adverse action notice. In the Domino’s case, the plaintiffs allege that Domino’s didn’t provide that information before taking adverse employment decisions based on the background check. (The FCRA also requires a second notice be provided to the applicant or employee after an adverse action has been taken.)

Imperative’s online report management tool will generate both the pre-adverse and post-adverse action notices on behalf of our clients at no charge. Many clients, however, opt to have us send the notices on their behalf to ensure that they are done in a consistent manner.

The federal court is currently reviewing the settlement agreement and the next hearing in the case is scheduled for May.

I am hosting a free webinar on April 25th at 1:00 pm entitled The Fair Credit Reporting Act’s Requirements for Employers. We’ll cover these FCRA requirements and others more deeply to help our clients and friends ensure that they aren’t the next employer in plaintiff’s crosshairs. The webinar is approved for one hour of general recertification credit by the HR Certification Institute.  I hope you can join me!