Whole Foods Market California, Inc. Accused of Violating Fair Credit Reporting Act On Background Checks

On February 7, 2014, a class action complaint was filed in the Northern District of California in the case Esayas Gezahegne v. Whole Foods Market California, Inc. In the complaint Plaintiffs allege that the company violated the Fair Credit Reporting Act (FCRA) in its conduct background searches on hundreds of job candidates who filled out online job applications on the company’s website. As part of this first stage in each candidate’s application process, s/he was required to “electronically sign” an online form that reads, in most relevant part:
“I hereby authorize Whole Foods Market to thoroughly investigate my references, work record, education and other matters related to my suitability for employment and, further, authorize the references I have listed to disclose to the company any and all letters, reports, and other information related to my work records, without giving me prior notice of such disclosure. In addition, I hereby release the company, my former employers and all other persons, corporations, partnerships and associations from any and all claims, demands or liabilities arising out of or in any way related to such investigation or disclosure.”

It is generally legal for employers to obtain credit reports and criminal records for the purpose of conducting background checks on potential employees, so long as they obtain consent and properly notify candidates of any adverse action taken by the employer on the basis of these data. The key legal claim in the complaint, the cornerstone of the plaintiffs’ argument in the case, is that the inclusion of a liability waiver with the initial consent form made that form facially invalid. The consent form therefore did not actually entitle Whole Foods to undertake its investigation of Gezahegne or other Class members, defined as “all individuals who executed online authorization forms permitting Defendant to obtain a consumer report as part of an employment applicationat any time from February 7, 2009 until the present…” Thus, Plaintiffs argue, these investigations violated their rights under the FCRA. Plaintiffs further claim that the company committed a willful violation of the FCRA by treating these invalid forms as authorizing them to collect credit and other records, since the law clearly states that an employer must disclose its intention to procure a consumer report for purposes of researching a job candidate “in a document that consists solely of the disclosure.” This is perhaps a fine legal point, but Plaintiffs cite several cases to support their argument that “an employer violates the FCRA by including a liability release in a disclosure document.”

Plaintiffs argue that Plaintiffs and each member of the Class–that is, each person whose consumer reports were collected by Whole Foods Market California on the basis of the invalid liability release–is entitled to $1000 for the Defendant’s willful violation of the FCRA, plus “an award of punitive damages to Plaintiff and the members of the Class in an amount to be determined by the Court,” plus payment of attorneys’ fees.

If you believe your rights under the Fair Credit Reporting Act have been violated by a prospective employer, please contact The Harman Firm, LLP