Most recently, a plaintiff filed a proposed class action against Genesis Healthcare, LLC (“Genesis”) and General Information Services, Inc. (“GIS”), alleging that the employer’s use of this type of service failed to meet the pre-adverse action notification requirements of the FCRA. Under the FCRA, an employer is required to provide applicants with a copy of their consumer report and a summary of their rights prior to taking a final adverse employment action. These cases generally allege that employers rely on the adjudication made by the consumer reporting agency without any independent evaluation or additional investigation, making the initial adjudication a “final” adverse employment action.
The complaint in this case alleges that Genesis hired GIS to conduct background checks, but also to compare the background reports it generates against hiring criteria provided to it by Genesis and to adjudicate whether those applicants are fit for employment. In this case, the plaintiff alleges that the hire-versus-fire adverse action actually occurred almost immediately upon the completion of the plaintiff’s consumer report by GIS, because GIS was tasked with adjudicating whether or not to disqualify the plaintiff based on the content of the report and “such process is automated and involves limited, if any, human discretion.”
Specifically, the complaint alleges that the date of the “adverse action” against the plaintiff was the date that GIS first created and instantly “adjudicated” her application. GIS stated on the plaintiff’s report that she “Does Not Meet Hiring Criteria,” which the complaint alleges is a conclusion that Genesis accepts and follows without any independent investigation or exercise of discretion. Thus, the plaintiff alleges that this adjudication by GIS is a final adverse employment action that occurs before the employer provides the applicant with the pre-adverse action notification and a chance to dispute the content of his or her consumer report, thus violating Section 604(b)(3) of the FCRA.
So while it is permissible for an employer to provide a consumer reporting agency with well-defined scoring criteria to consistently apply to the individual components of a background check, such scoring criteria should be used only as a preliminary tool to determine which results require review and which ones are acceptable, or “clear,” and require no further review. It is important for employers to remember that scoring criteria may not be used as a means of making an adverse employment decision without any further individualized analysis.
For additional information, please see our Compliance Issue Analysis: “Automatic Scoring of Results."
Posted: February 3, 2015