Michael Stores, the recipient of three separate class action lawsuits for alleged violations of the Fair Credit Reporting Act (FCRA – the federal law that regulates employee background checks, and which imposes significant rules and disclosure requirements upon employers), will now have a consolidated venue of New Jersey for all three federal cases.
Last month, the Judicial Panel on Multidistrict Litigation ordered that the District of New Jersey become the venue for all three lawsuits. In New Jersey, Judge Kevin McNulty was the first to preside over any of the cases, since this case was the first one that was filed (the other class action lawsuits being from the Western District of Missouri and the Northern District of Texas). Michaels Stores, although headquartered in Irving, Texas, has a nationwide presence. This national footprint, coupled with the McNulty case being the first lawsuit to be filed, was the rationale for consolidating all of these cases to New Jersey.
One of the purported violations of the FCRA rules was that Michaels Stores did not provide a separate and distinct employee disclosure and authorization form, i.e., a form whose sole purpose is the background check. One of the lawsuits claims that this form was included in one continuous online web page, along with other superfluous items, not related to the background check disclosure and authorization.
Another alleged FCRA violation was a general release of liability to Michaels Stores. This particular issue has been cited by many predatory plaintiff attorneys in other FCRA class action lawsuits in recent years, who see it as an “easy payday.” This is because “willful violations” require no damages to have occurred, yet they enable the plaintiff attorneys to seek statutory damages, plus punitive damages and attorney fees. The potential cost of litigation, unfortunately, often makes multi-million dollar settlements the least painful path for companies.
For employers who still have not reviewed their employee background screening procedures and disclosures, it is better late, than never to do so. A reliable background screening company can provide a consultative review of your company’s employee screening processes to help ensure that your organization is not the next target of an FCRA class action lawsuit.
Posted by: Rudy Troisi. President, Reliable Background Screening.