Kelly Services has agreed to settle a class action lawsuit for allegedly violating the Fair Credit Reporting Act (FCRA).As mentioned in our white paper - Top 3 FCRA lawsuits and how to prevent them - the background check release form is a top target for class action lawyers looking to capitalize on big paydays. According to topclassactions.com, plaintiffs allege that between July 18, 2012 and January 23, 2014, Kelly Services provided its employees and job applicants with a FCRA disclosure form to conduct background checks that also contained a liability release. Unfortunately, this is in clear violation of the Fair Credit Reporting Act (FCRA).
The Alleged Improper Sentences
The first allegedly improper sentence stated, “To the fullest extent permitted by law, I release Kelly, its employees, agents, successor and assigns, from any and all claims, actions or liability whatsoever that are in any way related to the procurement of a consumer report about me, or any subsequent investigation(s) of my background or personal history.”
The second allegedly improper sentence stated: “I understand that this Authorization is not a contract for continued employment and does not alter the at-will nature of my employment or offered employment.”
Plaintiffs claimed that the inclusion by Kelly Services of the waiver and disclaimer on the disclosure form violated the FCRA’s stand-alone disclosure requirement.
Kelly Services denies the allegations but has agreed to settle the FCRA class action lawsuit to avoid the risk and expense of ongoing litigation. Approximately 221,216 class members are eligible for benefits from the Kelly Services class action settlement.
The Settlement Agreement
Under the settlement agreement, Kelly Services will provide plaintiffs and the proposed class with several benefits, with the primary one being a settlement fund on Kelly Services' part of $6,749,000, none of which will revert to Kelly Services. Of this fund, it is contemplated that:
- Up to 33% (approximately $2,250,000) will go to class counsel for fees
- Administrative expenses (about $330,000)
- Incentive awards to Plaintiffs ($2,500 each) will also be deducted from the fund
- After all these deductions, the payout, assuming all 220,000 potential class members make a claim, will be about $41 for an Adjudicated Ineligible class member and about $14 for those who received a favorable rating
In addition to providing cash benefits to eligible Class Members, Kelly Services has also agreed not to include a liability release on its FCRA disclosure form for five years.
If you're interested in learning more about how your background check policy can remain compliant with FCRA regulations, contact us for a free consultation to see how Pre-employ can help you steer clear of class action lawsuits.