Whole Foods Settles Background Check Dispute

A federal district court judge in Florida recently approved a settlement between Whole Foods Market Group, Inc. and a putative class of some 20,000 employees and prospective employees effectively ending a dispute over alleged background check notification violations under the Fair Credit Reporting Act (FCRA).

The FCRA requires that employers disclose, in a clear and conspicuous manner, that a background check may be obtained and used for employment purposes. Here, the plaintiffs alleged, however, that Whole Foods unlawfully included a waiver and release of liability in the disclosure forms. In fact, Whole Foods provided two separate documents, a Disclosure Statement and a “Consent and Release of Information Authorization.” The release contained a liability release/waiver provision authorizing Whole Foods “to procure a consumer report on [Plaintiff] as part of a process of consideration as an employee,” as well as language “releas[ing] all parties from liabilities for any damages which may result from the disclosure of any information outlined herein.”

Prior to settlement, the district court had rejected the company’s motion to dismiss based on arguments that it gave its workers the two separate forms, one with the disclosure and the other with the liability release. Rejecting the motion to dismiss, the court held that it was bound by the facts alleged in the complaint, which claimed the two forms should be considered one document because they were read and signed at the same time. The settlement amount totaled nearly $800,000, resulting in a potential payout of about $24 per class member. 

Tip: This suit is one of several FCRA cases that has been filed recently, and employers should be cognizant of the potential for these claims. Cautious employers should consult with counsel to ensure that their background check disclosures are compliant with the FCRA and any other applicable federal, state, and local laws.