Why Background Check Compliance Matters: $5M Reminder

J.B. Hunt Transport Services just agreed to pay $5 million to settle a class action lawsuit tied to their background check process. The case centered around a candidate who was denied a job after an inaccurate background report and, more importantly, that the company failed to give him the legally required Pre-Adverse Action Notice, a copy of his report, and the Summary of Rights under the Fair Credit Reporting Act (FCRA). The plaintiff alleged that the company “systematically violates section 11681b(b)(3) of the FCRA” and “willfully and negligently” failed to provide the plaintiff with the required documents. 

For employers, this isn’t just another headline - it’s a warning that mishandling adverse action procedures can get very expensive, very quickly. 

What Employers Need to Know 

FCRA rules aren’t optional. Anytime you use a third-party background screening company, you’re bound by the FCRA. Employers have 3 major responsibilities under the FCRA – one of them is adverse action. 

Adverse action has two steps, not one. 

• Pre-adverse action notice: Before you deny a job based on a background check, you have to send the pre-adverse action notice with a copy of the report, plus the FCRA summary of their rights (and if applicable, state-specific notices) 

• Final adverse action notice: Only after giving them a chance to review and dispute the report (generally 5 business days but varies in some states) can you move forward, and you must send a final notice. 

  
  

  Timing matters. Employers can’t rush the process. They must wait 5 business days (or longer if required) and give the candidate an opportunity to dispute records. Many employers choose to do an individualized assessment during this waiting period to give the candidate an opportunity to explain the circumstances around their records.  

  
  

  Consistency and fairness are critical. Decisions should be based on accurate, relevant, and job-related information. Use the JRBN approach when evaluating records - is the record job related or related to business necessity? 

  
  

  Document everything. Keep records of what notices were sent and when. That documentation trail will be critical if you are challenged. 

  
  

  Technology helps, but it doesn’t replace compliance. Even if you automate parts of this process, the responsibility to comply rests squarely on the employer. 

  
  

Bottom Line 

This settlement is a costly reminder that background check compliance with the FCRA isn’t just red tape - it’s protection for both candidates and employers. If you’re using background checks in your hiring process, make sure your adverse action procedures are airtight, transparent, and well-documented. It’s not just about avoiding lawsuits; it’s about maintaining a fair and trustworthy hiring process.