Frito-Lay pays $2.4M to settle background check claims

Frito-Lay Inc. has agreed to pay $2.4 million to resolve claims that it violated the Fair Credit Reporting Act by using improper disclosure forms for obtaining consumer reports for pre-employment background checks.

The FCRA requires employers to use certain documents and to follow specified policies and practices when they use background checks to assess the qualifications of prospective and current employees. The plaintiffs in this case alleged Frito-Lay violated the FCRA by including the disclosure in a document that also included “impermissible extraneous information.”

The $2.4 million settlement represents $62.87 per Class Member and a net settlement of at least $40. This compensation is in line with comparable settlements for alleged FCRA violations in the Northern District of California.

FCRA compliance can be complex. To stay within federal FCRA guidelines, employers must adhere to three primary tenets:

• Applicant consent and authorization to a check. Employers must disclose that they will be screening and applicants must give consent to the screening.
• Summary of Rights. Candidates must be given “A Summary of your Rights under the Fair Credit Reporting Act” document.
• Adverse Action Procedures. Adverse action includes pre-adverse action when the employer is considering a negative action (no hire, termination or no promotion) based on the results of the background check. The applicant will then have time to review and dispute the report.

While most employers are aware of the federal FCRA regulations, it’s important to note that many states have also passed their own FCRA laws. Understanding and abiding by both federal and state FCRA regulations has become an important skill for hiring managers. For more information on FCRA compliance at any level, get in touch with our team of experts.