NO MICKEY MOUSE ISSUE—DISNEY GIVES EMPLOYERS A REMINDER ON THE PROPER USE OF CRIMINAL HISTORY CHECKS
A lawsuit on file in a California state court against Walt Disney Parks and Resorts underscores the importance of understanding and complying with the requirements of the Fair Credit Reporting Act ("FCRA") when obtaining background reports on job applicants. It has become a common practice for employers to seek information on applicants' histories, including prior employment, credit and criminal records, before deciding whether to make job offers. Some states and municipalities have passed laws and ordinances imposing restrictions on when in the interview process prospective employers may consider applicants' criminal records. Others prohibit receipt or consideration of information about expunged convictions. However, in the Disney case the primary issue is whether the employer violated the notice requirements of the FCRA, a federal law applying to employers throughout the U.S.
Roger Culbertson sued Disney in 2013. Culbertson claimed that the company relied on a criminal background report it received on him when the company decided not to hire him, but failed to provide him with a copy of the report or an opportunity to refute it. Although one might infer from the name of the law that it only applies to use of credit reports, the FCRA also regulates the use of other types of consumer reports, including reports on backgrounds and criminal histories of job applicants. It requires that anyone who uses such a report to deny an application for credit, insurance or employment—or to take another adverse action against the applicant—
must inform the applicant and provide the name, address and phone number of the agency that provided the information. The FCRA also requires that the applicant be given an opportunity to correct any inaccuracies in the report before any adverse action is taken based on the report.
In his lawsuit, Culbertson acknowledges that he was convicted of battery in 1998, but that the conviction was expunged from his record in 2010. Disney hired him in 2011, but before Culbertson appeared for orientation, the company received a background report inaccurately indicating that the 1998 conviction had occurred in 2010. The day after receiving this report, Disney's security department placed a "no-hire recommendation" in Culbertson's file. When Culbertson contacted the company to inquire about his status he was informed for the first time about the conviction in the background report, and he alleges the company told him he no longer had a job. The next day, Culbertson contacted the background check agency that had provided the report to Disney and informed it of the incorrect date of the conviction. Six days later, the agency issued a corrected report removing any mention of the conviction. However, by the time the report was corrected, Disney claims it was too late for him to receive the required orientation for his seasonal job and that Disney no longer needed him.
Disney contends that Culbertson lost his job not because of the background report, but because by the time the report was corrected, it no longer needed him. However, in refusing to grant summary judgment for Disney, the court held that the issue of whether Disney gave Culbertson a reasonable opportunity to respond to the inaccurate background check must be decided by a jury.
Regardless of the final outcome of this case, it delivers an important reminder to all employers about best practices in requesting and using background checks. An employer must inform a job applicant in a separate document (not part of the application form) of its intent to obtain a background report, and must receive the applicant’s written consent. Before denying employment or taking any other adverse action against an applicant or employee on whom it has received a negative background report, an employer should send a packet to the individual containing: (1) a copy of the report; (2) the name, address and phone number of the agency who produced the report; (3) the government publication, “A Summary of Your Rights Under the Fair Credit Reporting Act” found at https://www.consumer.ftc.gov/articles/pdf-0096-fair-credit-reporting-act.pdf; and (4) a letter warning the individual of the job denial or other adverse action which may result from the negative report and setting forth a reasonable amount of time (at least 5 business days) for the individual to respond. Only after that period of time has elapsed without a correction or other acceptable explanation should the employer reject the applicant or take other adverse action based on the report. The employer must notify the individual of this action, and written notice is recommended.
For more information on background checks, contact Skip Adams at (317) 236-2117 or email@example.com or any member of Ice Miller’s Labor and Employment Group.
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.