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Lawsuit Alleges Resort Chain Can’t Ask Potential Employees to Wave Liability on Background Checks

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San Diego, CAA January 20, 2017 ruling by the 9th Circuit Court of Appeals has produced a burst of California labor law litigation against companies that take background check forms used to screen potential workers a step too far and allegedly violate the Fair Credit Reporting Act.

Previous courts have made similar rulings but the 9th Circuit decision, Syed v. M-1, LLC is now considered the go to precedent setting case. The court ruled the employer was wrong when Sarmad Syed’s was asked to agree to a background check that released the company and any other third party from any liability that arose from their inquiries.

“Companies have been getting too cute with the forms they create to release themselves from liability for anything that may have happened during the background check,” says veteran employment law attorney, Nicolas De Blouw from the San Diego firm of Blumenthal, Nordrehaug & Bhowmik.

“A possible liability could be an incorrect credit score or incorrect information about a criminal record that caused the company to not hire the individual,” says De Blouw.

“If employers include extraneous information that invalidates the otherwise proper consent, and they run the background check, even though the job applicant signed it, it’s invalid because they have included this liability release clause,” says De Blouw, “That is what Syed’s decision said.”

Numerous companies have routinely included the clause and are now facing lawsuits in various jurisdictions according to De Blouw.

Blumenthal, Nordrehaug & Bhowmik has filed a nationwide class action against Marriott Ownership Resorts, Inc. alleging that the “company failed to adequately disclose and obtain authorization to conduct background checks on their employees” under the Fair Credit Report Act.

De Blouw does not comment on litigation the firm is involved in.

However, the complaint alleges, "The inclusion of the liability release clause in DEFENDANT's authorization forms invalidates the purported consent and also triggers statutory damages under the FCRA in the amount of up to $1,000 for each applicant that DEFENDANT obtained a consumer report without a facially valid authorization, as well as punitive damages, equitable relief, and attorneys' fees and costs."

The lawsuit also alleges Marriott Ownership Resorts failed to accurately "record and pay Plaintiff and other California Class Members for missed meal and rest breaks, and also overtime."

The complaint alleges “that the employees working in California for Defendant were not always able to take their thirty minute uninterrupted meal breaks before their fifth hour of work.”

LAS reached out to Marriott Ownership Resorts for comment but received no reply in time for deadline.


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