Watch Out For FCRA “Adverse Action” Lawsuits

The last two years have seen a spate of class action lawsuits filed against employers under the Fair Credit Reporting Act. Littler Mendelson attorney Jennifer L. Mora points out there is one prong of this law that hasn’t garnered much attention from the media, but it has from plaintiff lawyers and it behooves employers to take note. It’s the part of FCRA that requires employers to follow certain requirements if they intend to take “adverse action” – a term that’s been broadly defined – against a job applicant or current employee based entirely or in part on a consumer report. The person who is in line for the adverse action needs to be notified about the negative findings early enough in the process to attempt to refute them, with both “pre-adverse action” and adverse action notices. This post looks at some precedents that help clarify the substance and timing of these requirements, which on their face are not altogether clear.