A proposed class action lawsuit filed on November 24, 2014, alleges that Uber Technologies, Inc. and others violated the Fair Credit Reporting Act by obtaining criminal history reports, and taking adverse employment actions based on the information in the reports, without making disclosures required under the Act.

Uber runs a smartphone ridesharing application. Riders can request transportation, enter their location and destination, pay their driver, and rate their experience with the app. Drivers use company-provided smartphones pre-loaded with the Uber app to accept transportation requests.

Named plaintiff Abdul Mohamed was a driver with Uber until October 28, 2014, when he was notified by email that the company would not consider his proposal to work as an “Uber X” driver due, in part, to information obtained through a background report. Mohamed’s complaint alleges that he has only a minor criminal history involving Medicaid for his seven children.

According to Uber.com,

“Every ridesharing and delivery driver is thoroughly screened through a rigorous process we’ve developed using constantly improving standards. This includes a three-step criminal background screening for the U.S. — with county, federal and multi-state checks that go back as far as the law allows — and ongoing reviews of drivers’ motor vehicle records throughout their time on Uber.”

The FCRA regulates the use of “consumer reports” (including background reports provided by third party vendors) for employment purposes. In general, an employer may only obtain such a report when it (1) makes a clear and conspicuous disclosure to the employee or applicant, before the report is obtained, in a document that consists solely of the disclosure, that a report may be obtained; and (2) obtains prior written authorization from the applicant/employee. Before an employer takes adverse action against an applicant/employee based in part on a consumer report, it must provide the affected individual with a copy of the report and a description of consumer rights under the FCRA. The employer must also provide an adverse action notice if the report is used to deny employment. Mohamed claims that Uber failed to properly notify him that it would obtain his background report, and it did not provide him with a copy of his background report and description of his FCRA rights prior to terminating his employment.

Employers can avoid the issues that Uber is facing by consulting with their legal counsel to review FCRA requirements and craft compliant FCRA notices, authorizations, and disclosures. The FCRA regulations even provide a model summary of consumer rights – one of the documents that Mohamed claims Uber did not provide to him.