A class action lawsuit alleges that Stanford violated federal law by failing to get proper consent from prospective employees before performing background checks.
Under the Fair Credit Reporting Act (FCRA), employers conducting background checks must notify potential hires of checks in advance and obtain signed authorization forms. The FCRA requires that employers disclose their intent to use background checks in a “document that consists solely of the disclosure.” The lawsuit claims that Stanford failed to meet this stand-alone document requirement by combining its background disclosure with additional language that states that “all persons or entities requesting or supplying” relevant background information are released from liability. Such extra information could distract from the background check disclosure, the suit argues.
The University could be ordered to pay up to $1,000 per person for whom it performed a background check that was not properly authorized, as well as other damages and attorney’s fees, the lawsuit states.
An initial case management conference for the lawsuit, which was filed in October, is scheduled for Jan. 30 at a District Court in San Jose. The lawsuit proposes a class action on behalf of anyone who did not properly consent to background check between Aug. 16, 2015 and a date that will be determined by the court. The named plaintiff in the case is Theresa Richard, who according to the suit was hired in 2017 as a dining worker at Stanford’s Residential & Dining Enterprises (R&DE).
Stanford spokesperson EJ Miranda said the University will seek to dismiss the claim.
“This lawsuit is baseless,” he wrote in an email to The Daily. “The plaintiff received and signed a FCRA disclosure form which was fully compliant with the law.”
Stanford’s Human Resources website includes an employment application with a background check consent section at the end, as well as a separate background check form intended “for use when there is no SU Employment Application.” Both forms contain language mostly identical to what the lawsuit takes issue with.
“I agree to cooperate in the Background Investigation … and to release from all liability and responsibility all persons or entities requesting or supplying such information in connection with the Background Investigation,” Stanford’s forms state.
While the lawsuit focuses on the note about liability, the Federal Trade Commission also states on its website that the FCRA-mandated background check notice “cannot be in an employment application.”
Asked if the background check section included in the “Employment Application” document on Stanford’s Human Resources website violates the FTC’s guidance, Miranda stated that “the disclosure and consent form is a standalone document and is not contained in the employment application.”
Other recent class action lawsuits have successfully sought compensation from employers — including Stanford — for failing to clearly disclose and gain consent for background checks as set out in the FCRA.
A district court ruled in 2015 that Stanford violated the FCRA’s stand-alone stipulation by noting seven state laws and adding a disclaimer that “nothing herein shall be construed as an offer of employment or contract for services,” alongside the school’s disclosure to applicants about background checks.
However, the Central District of California ruled this year in an employer’s favor in another suit about FCRA technicalities, finding that Hansen & Adkins Auto Transport did not break the law by including its background checks notice at the back of an application packet and within a package of several documents. The Court found that the relevant disclosure need not be provided “separate in time from any other documents” and that the disclosure form itself met standards.
Lawyers representing the complainant did not respond to a request for comment.
Contact Hannah Knowles at hknowles ‘at’ stanford.edu.