Courier Service Settles Lawsuit Challenging Background Check Disclosure Form and Notices

The recent matter of Nesbitt, et al. v. Postmates Inc., Case No. CGC15547146 in the Superior Court of the State of California, County of San Francisco, demonstrates the continuing trend of litigation regarding the content of background disclosure forms, as well as ongoing issues regarding the failure of employers to provide notice of adverse action to applicants.

The plaintiffs challenged Postmates’ background screening form, stating that the form was not in a “stand alone” format, as required by the Fair Credit Reporting Act. The plaintiffs also alleged that the company failed to take the necessary steps to inform the applicants when making adverse hiring decisions on the basis of the background screening reports.

To settle the lawsuit, Postmates will create a $2.5 million settlement fund to be distributed to eligible class members, which will include all consumers who applied to work as a Postmates courier and were subjected to an employment background check between July 31, 2013 and May 1, 2016.

The case illustrates the continuing focus on employers’ disclosure forms and compliance with adverse action requirements under the FCRA. Over the past three years, there has been a dramatic uptick in claims alleging that employers did not set forth the background screening authorization form in a “stand alone” document that consisted only of the disclosure. Claims regarding the failure to provide adverse action notices, as well as the timing of such notices, also remain frequent. This latest settlement is yet another reminder of compliance issues that should be considered by all employers.

Troutman Sanders is an industry leader in FCRA compliance and litigation, and it will continue to monitor these litigation developments.