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Snacking Giant Pays in Background Check Lawsuit

Last month, Frito-Lay, Inc., one of the largest snack food manufacturers, generating over $1 billion in sales over the past year, agreed to pay $2.4 million to settle a class action lawsuit over alleged violations of the Fair Credit Reporting Act (“FCRA”) for improper handling of background checks.

FCRA Regulations

Under the FCRA, when an employer plans to run a background check on an existing or prospective employer, it must adhere to specific procedures outlined within the statute.  The FCRA states that the employer must first inform the employee or applicant that it plans to obtain a background report. 

First, the disclosure requirement must be written in clear and conspicuous language, may not be part of the application, and cannot be buried in an information packet.  Second, the employer must obtain written consent from the employee or applicant.  Third, if the employer is considering taking adverse action against the employee or applicant, it must notify the subject that an adverse decision is being considered.  The employer must provide the subject with a summary of his or her rights under the FCRA, as well as a copy of the report used in the background check.  The employer must then wait the appropriate amount of time to allow the employee or applicant to dispute any inaccurate with the credit reporting agencies before taking adverse action. 

The Frito-Lay Case

In this case, the class plaintiffs claimed that Frito-Lay violated the FCRA when it presented job applications to potential employees that contained a request to conduct a background check in a document that also contained superfluous information, including online links to marketing web pages, between January 2015 and December 2016.  The class of plaintiffs argued that under the FCRA, a consumer report for employment purposes cannot be obtained without, among other things, providing a clear and conspicuous disclosure in a document that consists solely of the disclosure. The plaintiffs alleged Frito-Lay violated the FCRA by including this disclosure in a document that also included impermissible extraneous information.

Included in the class are just over 38,000 plaintiffs that all applied for a job with Frito Lay, Inc. during the time in question.  In the recent landmark case, Spokeo vs. Robins, the Supreme court ruled that a plaintiff must prove a “concrete injury” for a sufficient violation against an employer under the FCRA.  This settlement by Frito Lay shows that the decision in Spokeo did not mean that employers are in a position to become lackadaisical about FCRA compliance.  

This settlement with Frito Lay is just another example of how consumers need to be aware of their rights under the law.  If you believe your rights have been violated and would like the advice and assistance of counsel, contact SmithMarco P.C. for a completely free case review.

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