Kmart Settles FCRA Class Action Lawsuit for $3 Million

The Fair
Credit Reporting Act
(“FCRA”) requires employers Justice _scaleto adhere to the adverse action procedures when
notifying applicants that they have been denied employment when
background checks
to make hiring decisions.  In simple
language, what this means, is that if you apply for a job and are
not hired based on information obtained in your background check,
the employer must send you a notification letter.  That letter
must advise you that the adverse action was taken , in part, due to
information on a consumer report that was obtained about
you.    In the absence of following these strict
guidelines, on January 25, 2013, retailer Kmart settled an
employment class action lawsuit for $3 million after allegedly
failing to provide applicants with an adverse action letter.

The class action lawsuit, which included around 64,500
plaintiffs, claims that Kmart violated the FCRA because it failed
to notify job applicants after they were denied employment based on
information contained in a background check.  Under the FCRA,
applicants must be notified when a potential employer takes adverse
action based on information reviewed from a
Consumer Reporting Agency
(CRA).  In Pitt v. K-Mart Corp.,
the lead plaintiff filed suit alleging Kmart failed to follow
required practices in connection with its use of background checks
in the hiring process in violation of 15 U.S.C. § 1681
et seq
.  Case No. 11-cv-00697, U.S. District Court for the
Eastern District of Virginia.  Pitt argued that his
misdemeanor convictions from 2002 included in the background report
reviewed by Kmart took place prior to the time frame listed on the
employment application which indicated it would report convictions
from the preceding seven years only.  Pitt was not notified by
Kmart in writing that he was not hired based on this information
and therefore was unable to dispute the
inaccuracy with the credit reporting agency(s)
that were still
reporting this information after the reporting period passed. 
The lawsuit contends that Kmart’s violation of the act was
two-fold….first, that Kmart failed to provide the applicant(s) with
the most current version of the FCRA Summary of Rights before
taking adverse action that was based on the background check, and
second that Kmart failed to provide the applicants with a copy of
the applicable background check far enough in advance of taking
adverse action against the applicant so that he or she had an
opportunity to dispute any inaccurate information

Kmart has denied any and all allegations of wrongdoing claimed
in the lawsuit and argued that its conduct was in compliance with
the FCRA
Despite these denials, Kmart has decided it is in its best interest
to settle the lawsuit to avoid the expense and risk of uncertainty
in continuing the litigation. 

If you feel you have been denied employment based on a
background check
and the employment did not comply with the
requirements of the FCRA, contact SmithMarco
for a free case