District Court Finds Job Applicant Has No Standing To Bring FCRA Adverse Action Claim Because Background Check Was Accurate

Under the Fair Credit Reporting Act, when a potential employer is considering using a background check to deny an applicant employment, the employer must follow a prescribed adverse action process. For qualifying transportation employers, this means the employer must provide the applicant with a notice of adverse action within three days of the final adverse decision. The District Court for the Northern District of Illinois, however, recently confirmed that even if an employer fails to follow the proper procedure, an applicant may not have standing to bring an adverse action claim if the background check at issue is accurate. This could be a significant decision for employers facing adverse action claims from applicants who indisputably have a disqualifying conviction in their background.

Specifically, in Ratliff v. A&R Logistics, Inc., plaintiff Jerome Ratliff, Jr. claimed that A&R Logistics declined to hire him based on his background check without following a proper adverse action process. In response, A&R Logistics moved to dismiss the complaint on the ground that Ratliff had not suffered any injury-in-fact stemming from the alleged violation and, therefore, had no standing. According to A&R Logistics, Ratliff could not show any injury-in-fact because the background check at issue was accurate.

The Court conducted its standing analysis in two parts. It first considered whether Ratliff had suffered an "informational injury" that could satisfy the injury-in-fact requirement for standing. The Court found that a plaintiff could show "informational injury" if a third party was disseminating inaccurate information about him or her that could cause concrete harm. However, because Ratliff failed to allege that the background check...