Sam’s Club Failed to Provide Notice Before Firing Worker Based on Background Check, Lawsuit Alleges

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A proposed class action claims Walmart, Inc. has failed to provide prospective employees with a copy of their background report and statement of their rights before taking adverse action based on the report’s contents.

According to the 21-page case, the defendant, who operates nationwide under the Walmart and Sam’s Club trade names, has violated the Fair Credit Reporting Act (FCRA) by using job applicants’ consumer reports to make employment decisions without complying with the law’s strict notice requirements.

Walmart/Sam’s Club, before denying an employment opportunity based in whole or in part on the contents of a consumer report, must provide the applicant with a copy of the report and a summary of their FCRA rights, which thereby allows the individual “ample time” to correct any inaccuracies or preemptively discuss negative information with the employer, the lawsuit says.

Walmart, in its own name and doing business as Sam’s Club, has a uniform, national practice of conducting background checks on current and prospective employees, the case explains. Per the complaint, the defendant obtains consumer reports from an outside reporting agency (CRA) and provides certain hiring criteria to the CRA to compare against the results of the report. Once the consumer report is obtained, the CRA compares the report to Walmart’s hiring criteria and assigns the individual a grade or score in a process known as “adjudication,” the lawsuit says. Next, the CRA classifies the reports as either “eligible” or “ineligible” (or similar terms such as “clear” or “requires review”) before passing them on to Walmart/Sam’s Club, the suit relays.

The lawsuit contends that when the adjudication results are presented to Walmart, the retailer adopts the CRA’s grades “without meaningful review” and enters a code into its computer system to mark certain applicants as ineligible for hire, or certain employees as unable to continue their employment.

“At that point, Defendant considers the individual to not be hirable or no longer an employee,” the complaint reads.

The plaintiff says he began working for a Tampa Sam’s Club as a temporary employee in August 2020 and applied to the defendant for full-time employment that December. As part of the hiring process, Sam’s Club obtained the plaintiff’s consumer report from First Advantage, who deemed him ineligible for continued employment, the case alleges. Per the suit, the defendant entered into its computer system a code confirming the plaintiff’s ineligibility and denied him continued employment based on the results of his consumer report.

Sam’s Club, according to the suit, violated the FCRA by taking adverse action against the plaintiff without first providing him with pre-adverse action notice, including a copy of his background report and a written summary of his rights, at least five days before marking him as ineligible to work.

The plaintiff says that after his termination, he was concerned about the accuracy of the information in his consumer report and worried about how it might affect future employment prospects. Per the case, the plaintiff spent three months attempting to obtain a copy of his consumer report from First Advantage despite being entitled to it by law. 

Walmart, the lawsuit argues, “had no right” to take adverse action against the plaintiff without fulfilling its the statutory obligations under the FCRA.

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