You would think they would know better.  They employ 168,500 people, have 1091 stores, eight distribution centers, and 10 manufacturing facilities, all in the South.  But Publix Stores is paying $6.8 million to settle a class action suit because when they hired, they neglected to use a separate piece of paper.

They have 11,000 stores in 40 states, but Dollar General is about to settle a $4 million-plus class action suit because they “conducted background checks on job applicants without complying with federal law,” reports classaction.com.  You would think they would know better, too.

We could understand it if it were a mom-and-pop business with two employees.  After all, they don’t have dedicated Human Resources Departments whose job it is to keep up with all the arcane hiring requirements the federal government comes up with, possibly annually.  With these two lawsuits comes a lesson for both employers and rental owners.

Employee and rental applicant background checks are considered “Consumer Reports,” something that many employers and landlords use to examine the qualifications of an applicant. The Federal Trade Commission’s website explains the requirements in relatively simple terms.

First, the notice must be in writing and on a separate piece of paper.  That means it may not be on the same form as the employment application.

Second, the applicant must sign giving written permission to obtain the consumer report.

Third, the employer or rental owner must certify to the company that is providing the report that one, they have notified the applicant and received permission; two, that they have complied with the Fair Credit Reporting Act’s requirements; and three, that they won’t illegally discriminate against an applicant as provided by the Equal Employment Opportunity or Fair Housing laws.

That’s where Publix Stores ran into trouble.

Is that right and reasonable?  It really is irrelevant, isn’t it?  If we are in business and want to hire or rent to someone, the federal government has created hoops that employers and landlords must jump through to be “legal.”  Not jumping through the hoops “properly,” or tripping over the bottom of one, can cause untold grief and cost a lot of money.

Dollar General, in addition to all the things Publix Stores did, also never even told applicants they planned to do a background check. They just did them. They also ran afoul of the law another way. When they decided not to hire someone, they never explained that they found “adverse” information in the consumer report they pulled. The Federal Trade Commission provides that you must include a copy of the “consumer report” that prompted your decision, and provide a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act.” Both of those will be provided by the company that gave you the report.

If a company or rental owners fails to hire, promote, or rent based on what is found in a consumer report, they must notify the applicant or employee of that fact, orally, in writing, or electronically.  Of course, it is smart to keep a copy properly dated in case the applicant claims he or she never was notified.

That “adverse action” notice must include:

• the name, address, and phone number of the consumer reporting company that supplied the report;
• a statement that the company that supplied the report did not make the decision to take the unfavorable action and can’t give specific reasons for it; and
• a notice of the person’s right to dispute the accuracy or completeness of any information the consumer reporting company furnished, and to get an additional free report from the company if the person asks for it within 60 days. (ftc.gov)

To reiterate, all those same requirements apply to rental owners screening applicants, too.

There’s one more requirement that many employers and rental owners may inadvertently fail to comply with.  That involves “Investigative Reports.”  Many times employers and rental owners call references to find out about a “person’s character, general reputation, personal characteristics, and lifestyle,” reports the Federal Trade Commission.  Figure that any phone call, letter, email, or other contact falls under that purview.  Thus, if a call or plan to call a previous landlord or employer, requires that the applicant be informed in writing of the plan to do so.  That notice must also include “a statement that the person has a right to request additional disclosures and a summary of the scope and substance of the report.”  Notice that the notice need not include the name of the person who provided information that led to the refusal to hire or rent to that applicant.

There are more requirements, too many to begin to enumerate here. The point is that if you are not familiar with all the hoops the federal, and maybe your state, government wants you to jump through when screening employment or rental applicants, you are safest using a service such as ReportIntel that knows exactly how to go about it legally and effectively, and keeps up with the latest requirements.

By Robert L. Cain