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  • Writer's pictureDavid Manes

Background Checks and the FCRA

A federal judge in the Eastern District of Pennsylvania recently granted Rite Aid’s 12(b)(6) motion in a putative class action filed against it for an alleged violation of the Fair Credit Reporting Act. The judge did permit Plaintiff fifteen days to amend the complaint in the decision, which was handed down on July 30, 2014.

At issue in this case is Rite Aid’s use of background reports provided by Lexis Nexis to screen job applicants. LexisNexis would do both a regular background check on search its Esteem database. This database held information on employees that was required to be submitted by member companies. The information was only supposed to be submitted if four conditions were met: 1) the theft was of cash, merchandise, or company property but had to be strictly related to a theft by that employee; 2) the employee had to be over sixteen years of age whe the incident occurred; 3) the dollar value of the theft had to be greater than five dollars; and 4) the incident was reported for criminal prosecution or the employee had signed a Voluntary Admission Statement. As it turns out, members who used the LexisNexis Esteem database would not only submit reports when the employee had been involved in the theft, but also other incidents such as loss due to carelessness, inattention, or violation of company policy.

After reviewing the background reports, LexisNexis would score the reports as “eligible,” “non-competitive,” or “decisional.” If an incident was found in the database, the report came back non-competitive, and LexisNexis would send a letter on Rite Aid stationary to the applicant notifying them of the discovery and that they had five days to submit additional information.

Plaintiff Kyra Moore had been employed with CVS for a number of years when some merchandise she had left on the counter was taken. In filling out a Voluntary Admission Statement, Moore did not say that she stole the items, but simply that she intended to pay for the items. She was then sent home and fired. CVS sent a copy of the Voluntary Action Report to LexisNexis for entry into the Esteem database.

In 2011, Moore applied to work at Rite-Aid and was told she would be hired after she complete a drug test and background check. She received the letter in the mail from LexisNexis notifying her that an incident had been found during her background check and that she had five days to submit additional information.

Moore brought suit against Rite Aid, claiming that Rite Aid violating the FCRA when it took an adverse action against the class members based on the LexisNexis background reports. She alleged that the adverse action occurred when LexsNexis determined the status of the applicant as non-competitive. Rite Aid filed a motion to dismiss.

The court sustained the motion to dismiss on the grounds that Plaintiff did not plead that Rite Aid relied on the LexisNexis adjudications as final determinations regarding employment. The court has granted Plaintiff an additional fifteen days to amend her complaint.

This article was first published on the Network on August 1, 2014.

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