Class action filed against Wal-Mart over background checks

A class action has been filed against Walmart Inc., alleging that the company violated federal law by failing to properly disclose it used employee consumer reports to conduct background checks.

According to the federal suit filed Wednesday in Los Angeles, the Fair Credit Reporting Act requires that in order to use consumer reports for background checks, the disclosure needs to exist on a dedicated, separate document.

According to Aashish Y. Desai of Desai Law Firm, his client's consumer report disclosure also included releases for extraneous information such as drug testing and work history. Leonard Luna v. Wal-Mart Transportation LLC, 18-CV00331 (C.D. Cal., filed Feb. 14, 2018).

"You need that document by itself. It can't be buried in a piece of paper that asks for all kinds of other information," he said.

"This is exactly what the FCRA is for," Desai added. "It's to give you certain info in a certain way and if you don't, you get a penalty."

The act lays out a statutory penalty of $100 to $1,000 per violation.

Desai's client is a truck driver for Wal-Mart Transportation LLC, but the complaint is on behalf of all similarly situated workers. He said he anticipates a large class due to the company's size.

Wal-Mart is the largest private employer in the U.S. with more than 2 million employees, according to Forbes.

Desai expressed confidence in his claim in part because of a ruling by the 9th U.S. Circuit Court of Appeals last year in a case with similar claims.

In Syed v. M-I LLC, a prospective employee signed a form that served as Fair Credit Reporting Act disclosure form and a broad liability release. After the plaintiff's case was dismissed by an Eastern District of California judge, it was reversed by an appellate panel in January 2017.

"M-I willfully violated the statute by procuring Syed's consumer report without providing a disclosure 'in a document that consist[ed] solely of the disclosure,'" wrote Judge Kim McLane Wardlaw for a 9th Circuit panel that also included Judges Mary M. Schroeder and John B. Owens. Syed v. M-I LLC, 2017 DJDAR 556.

"The modern information age has shined a spotlight on information privacy, and on the widespread use of consumer credit reports to collect information in violation of consumers' privacy rights," Wardlaw wrote.

Attorneys for M-I petitioned the U.S. Supreme Court for a review of the appellate ruling, but were denied in November.

"After Syed, it became clear that California law on this in cases was going to stand," Desai said. "Companies willfully putting their head in the sand and pretending not to know what the regulations are is no longer an excuse."

He added that the Fair Credit Reporting Act allows for statutory penalties because actual injury can be difficult to discern in violations, but in this case he said his client lost a prospective job due to wrong information acquired from a former employer through this improper disclosure.

"The first thing we want to get is for Wal-Mart to start complying with the law," Desai said.

"It's big enough and has enough lawyers to know better," he added. "Second, we'd like for them to pay the statutory penalty for each violation, for each class member for the past five years, which is what the law requires."