Settlement Puts Spotlight on Background Checks

This story appears in the June 16 print edition of Transport Topics.

A recent $870,000 settlement in a lawsuit brought by more than 7,000 truck drivers against New England Motor Freight has again put in the spotlight the stringent requirements for motor carriers when rejecting job applicants based on background checks.

A New Jersey federal court last month approved the settlement agreement between the New Jersey-based motor carrier and a court-certified class of truck drivers. The drivers alleged in a 2012 lawsuit that the carrier denied them employment after conducting criminal background checks, obtaining credit reports and driver history records without their authorization.

The lead plaintiff in the lawsuit was a driver whom the carrier did not hire because it conducted, without his authorization, a background check that erroneously identified him as a convicted felon, said the driver’s attorney, Matthew Dooley of Sheffield Village, Ohio.

The New Jersey case was the latest in a series of driver lawsuits alleging violations of the federal Fair Credit Reporting Act, which contains strict requirements when employers seek “consumer reports” on job applicants.

The reports can include criminal background checks, credit checks or driver history records.

The law requires that employers gain written permission prior to performing a background check.

Motor carriers, however, are in some cases exempt from that provision and are permitted to obtain permission orally or by electronic means, according to transportation attorneys.

It’s not the first case of motor carriers failing to comply with the strict disclosures required by the Fair Credit Reporting Act.

Nor will it likely be the last, said trucking attorney Rob Moseley of the Greenville, South Carolina-based law firm of Smith Moore Leatherwood LLP.

Other legal agreements with drivers under the Fair Credit Reporting Act have included a $4.4 million settlement with Swift Transportation earlier this year, a $2.75 million settlement with U.S. Xpress last year and a $2.6 million civil penalty assessed in 2012 against credit-screening firm HireRight Solutions Inc. by the Federal Trade Commission.

“I’m surprised that we haven’t seen more,” Moseley told Transport Topics. “These are class-action cases just waiting to be filed. If I was a plaintiffs’ lawyer, this is where I would be digging.”

David Robinson, an attorney with the Indianapolis law firm of Scopelitis, Garvin, Light, Hanson & Feary P.C., agreed that the future legal landscape could increasingly include Fair Credit Reporting Act “attacks” on motor carriers.

“I believe these cases are a significant problem for the motor carrier industry,” Robinson said. “There are some disturbing settlements out there.”

Under the Fair Credit Reporting Act, if a carrier uses any information contained in consumer reports to decide not to hire the applicant, the carrier must provide a written “post-adverse action” notice to the applicant, outlining information contained in the report that they used as a reason to not make a hire. If an applicant asks for a copy of the report, the carrier must oblige within five days.

“That’s the thing that’s getting everybody in trouble,” Moseley said. “Not many truckers are actually giving the adverse action notice.”

When a truck driver applies for a job in person, the carrier generally must first supply the applicant with a pre-adverse action notice before actually rejecting an application, Moseley said.

The pre-adverse action notice gives the job-seeker a chance to respond to the report’s contents, Dooley said.

Perhaps the applicant was not the same person that the record references, maybe the report was inaccurate or incomplete, or maybe an applicant can explain he was “young and foolish” at the time of a conviction, he said.

“Or maybe you were charged with a felony, but you pleaded it down to a misdemeanor, but the report shows it’s a felony,” Dooley said. “Maybe the report shows the same thing three or four times. There is a litany of things that can happen that a person can explain away.”

Robinson said the most nettlesome problems have centered on a carrier’s failure to obtain permission from drivers for the checks and not providing adverse-action notices when they decide not to hire.

“You have to remember that all this is taking place in a very fast-paced recruiting and orientation process for most carriers,” Robinson said. “There is in many cases just a lack of awareness of the requirements, and they are very strict requirements.”