NY Federal Court Grants Preliminary Approval of FCRA Class Action Settlement

On December 11, 2015, a New York federal court preliminarily approved the settlement in Legal Action Center’s class action lawsuit, Jones v. Halstead Management Co. et al., No. 1:14-cv-03125-VEC. The suit charged Halstead with criminal background screening practices that cost Mr. Jones a job as a doorman and violated the Fair Credit Reporting Act (FCRA).

Plaintiff Kevin A. Jones, who had no criminal record, lost a job with Halstead because a commercial background check conducted by Sterling Infosystems, Inc. mixed him up with a Kevin M. Jones, who had several convictions. Legal Action Center filed the suit in the Southern District of New York with co-counsel, Francis & Mailman, P.C.

The lawsuit charged Halstead and its related entities (Halstead) with systematically failing to provide job applicants with a “stand-alone disclosure form” – a clear and conspicuous form consisting solely of the disclosure that a background check may be obtained for employment purposes. Section 1681b(b)(2) of the FCRA requires employers to provide a stand-alone disclosure form that does not contain extraneous information so that job applicants clearly understand that a background check may be performed.

Plaintiff Kevin A. Jones, who had no criminal record, lost a job with Halstead because a commercial background check conducted by Sterling Infosystems, Inc. mixed him up with a Kevin M. Jones, who had several convictions.

The suit also charged Halstead with unlawfully revoking Mr. Jones’s job offer based on the erroneous background report without first providing a pre-adverse action notice. Section 1681b(b)(3) of the FCRA requires that prior to taking adverse action, employers must provide applicants with notice. Employers also must provide applicants with a copy of the report and a summary of their rights under FCRA. The purpose is to give applicants an opportunity to dispute or respond to the report prior to adverse action being taken.

On January 15, 2015, Plaintiff moved to certify the class for the stand-alone disclosure form claim, while pursuing the pre-adverse action notice claim on an individual basis. The parties entered into a settlement agreement on September 3, 2015, and Plaintiff moved for preliminary approval of the settlement the next day.

The Court’s recent order found the settlement agreement, “upon preliminary review, to be fair, reasonable, and adequate to the Class.” The Court provisionally certified the following Class:

“all natural persons residing within the United States and its Territories regarding whom, from May 1, 2012 through November 12, 2014, the Defendants procured or caused to be procured a consumer report for employment purposes using a written disclosure containing language substantially similar in form to the disclosure forms provided to Plaintiff.”

The Class has approximately 1,795 members who will each receive $325 from Halstead. The process of notifying class members that they are eligible for compensation now will move forward.

“When employers comply with the Fair Credit Reporting Act, it helps ensure that individuals with criminal records get a fair shot at employment.”

“The Court’s preliminary approval of the settlement agreement is a great result for the class and reflects significant changes Defendants made to their practices because of this suit,” said Monica Welby, Senior Staff Attorney with the Legal Action Center. “When employers comply with the Fair Credit Reporting Act, it helps ensure that individuals with criminal records get a fair shot at employment.”

In the settlement agreement, the Halstead Defendants acknowledged the lawsuit resulted in the use of new forms to comply with the FCRA’s stand-alone disclosure form requirement and the engagement of a new vendor to replace Sterling, the background screening company responsible for the erroneous check on Mr. Jones.

The court scheduled a final approval hearing on May 5, 2016.

To read the Court’s Order and the Settlement Agreement, click here.

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