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New Adverse Action Case Law

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Below are two recent legal cases that can help delineate how to minimize your liability when denying someone a job (or any other adverse action like denying a promotion).

In one case the employer settled for $12 million. In the other, the case was dismissed. Clearly it would be preferable to an employer to have a case dismissed, however employers would often like to avoid lawsuits altogether and thus often want to make business decisions that keep them out of the lawsuit crosshairs.

Amongst other aspects in these cases, MeSH feels more comfortable with at least a 10-day waiting period between sending the "Intent to Take Adverse Action" and sending the "Notification of Adverse Action". In both cases there was a 5-day waiting period, however in the dismissed case, the applicant happened to respond within this period and this may have been why the court determined that this particular applicant had sufficient time to respond. MeSH is not comfortable using this case a basis to conclude that a 5-day waiting period has been deemed sufficient.  In addition, if the applicant contests the Adverse Action prior to sending the "Notification of Adverse Action", MeSH advocates extending the 10-day waiting period for as long as reasonable to assess the applicant's contention.

Another aspect in these cases is with regard to adjudication. These and other lawsuits are aggressively looking for an argument that suggests the CRA (i.e., the "Credit Reporting Agency" also known as the Background Screening Company) is in any way involved in making the decision to take Adverse Action. Many background screening companies push this limit where MeSH has held strong to not run this liability risk for itself and its clients. One aspect of the Adverse Action process that was established in the dismissed case is that the process MeSH has used since 2006 of apprising the employer to review certain cases does not violate the FCRA.

  Case 1: "Manuel vs Wells Fargo" (Settled $12million)

  Case 2: "Ramos vs Genesis" (Dismissed)

In contrast...
The MeSH technology and established process are built to efficiently produce quality and timely results while minimizing liability. If you want to do business with this type of company, give us a call (888-988-MeSH).

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