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Inaccurate Background Reports Concerning Job Applicants May Give Rise to Employer Liability under FCRA

The Missouri Court of Appeals recently reversed a trial court’s order for summary judgment in favor of an employer in a case brought under the Fair Credit Reporting Act (“FCRA”) for lack of standing, where the employer withheld an offer of employment based on inaccurate information obtained through a criminal background check.

In Courtright, et al. v. O’Reilly Automotive, three applicants filed suit asserting, among others, adverse-action claims against O’Reilly after their conditional job offers were revoked based upon information obtained from consumer reports and background checks. Plaintiffs alleged that O’Reilly committed procedural violations of FCRA by failing to disclose the contents of each applicants’ background reports and providing them the opportunity to cure any inaccuracies in the reports before taking adverse action against them – i.e., revoking each of their conditional offers of employment. The trial court entered summary judgment in favor of O’Reilly, and the three applicants appealed. The judgments against two of the three applicants were affirmed due to their failure to allege sufficient injuries to establish standing to bring a claim under FCRA, as the allegations in the complaint did not establish that the procedural violations of FCRA were the cause of their alleged harm.

However, the Court of Appeals for the Western District of Missouri found that the third applicant, Mr. Bradley, did state sufficient injuries caused by the procedural violation. Bradley demonstrated that he was not provided the background check results before his offer of employment was revoked. He instead had to request the background report from the third party vendor used by O’Reilly and to correct the issues directly with that vendor. He learned that the report erroneously stated that Mr. Bradley had been convicted and sentenced for stealing leased or rented property. After Mr. Bradley disputed the report in writing, the vendor corrected the report and provided it to O’Reilly. O’Reilly then hired Mr. Bradley, but not until after he had gone approximately two months without a paycheck.

The trial court had held that the alleged injury was caused by the inaccurate information provided by the third party vendor and entered judgment in favor of O’Reilly on that basis. But the Court of Appeals reversed the judgment, reasoning that if O’Reilly had furnished the report to Mr. Bradley before revoking the job offer, as required under FCRA, Mr. Bradley would have had the opportunity to resolve the error and avoid his period of unemployment.

Based upon this Court of Appeals holding, Missouri employers are strongly advised to promptly inform job applicants of any negative, material information found in background checks before taking any adverse action against the applicant, regardless of where and how the information was obtained.