Popular Ridesharing Company Faces Class Action Lawsuit

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The world’s largest ridesharing company was recently sued in a class action lawsuit for alleged “unlawful use of criminal history to discriminate against its drivers in New York City as well as its noncompliance with human rights and fair credit laws.” Specifically, the complaint cites alleged violation of New York City Human Rights Law (NYCHRL), the Fair Credit Reporting Act (FCRA) and New York’s state-version of the FCRA (NY FCRA). The complaint also alleges that the California-based Consumer Reporting Agency (CRA) that compiled the information on the background report is a “willing partner in this unlawful conduct.”

Background of the Lawsuit:
In August 2020, the company ran a background check using a CRA to obtain the consumer report which reported criminal history information (i.e. a single 2013 misdemeanor speeding ticket from the state of Virginia which notably would not be considered a misdemeanor in New York). The named plaintiff—a black resident of NYC—had driven for the company from 2014 through August 2020. In 2017, the company started using the CRA to prepare consumer reports in response to increased driver violence. Previously, they used the New York City Taxi and Limousine Commission to obtain background checks. One day after the background check was completed by the CRA, the company deactivated the plaintiff from their labor platform which resulted in the plaintiff no longer being able to drive for the company. The complaint alleges that the company took adverse action based on the criminal history information from the consumer report and did so without “engaging the Fair Chance Act process, which incorporates Article 23-A of the New York State Corrections Law.”

Alleged Violations:
Since its founding, the ridesharing company classified its drivers as independent contractors. In November 2019, the New York City Council amended the New York City Human Rights Law (NYCHRL) to include independent contractors within its expansive protections against discrimination and unfair treatment. The amendment went into effect January 11, 2020.

One of those protections is the city’s Fair Chance Act which requires employers to evaluate individuals’ criminal histories on a case-by-case basis, taking into consideration several factors. For example, employers must consider factors such as the amount of time that has passed since the event that led to the criminal conviction, the seriousness of the conviction record, and the specific duties and responsibilities of the job.

  1. because a direct relationship exists between the conviction and the job; or
  2. because the conviction history creates an unreasonable risk to people or property.

NYCHRL also requires employers to provide required documents and disclosures and keep the position open for the applicant for at least three business days to respond to the employer’s concerns about any criminal history on the background check.

Similarly, the federal Fair Credit Reporting Act (FCRA) requires employers to provide notice to the consumer prior to taking adverse action based on the consumer report which includes providing a copy of the consumer report along with a summary of rights under federal law and other applicable state notices. The employer then must follow a waiting period before taking final adverse action. New York’s state law equivalent also requires employers to provide the consumer with a copy of Article 23-A of the New York Correction law.

Based on the numerous alleged violations, the plaintiff proposes 2 classes:

  1. Criminal History Discrimination and Notice Class (i.e. individuals who were denied employment based on criminal history information and who did not receive the pre-adverse notice action, adverse action notice, a copy of their consumer reports, a written description of their rights under FCRA, a written copy of Article 23-A, or a copy of the company’s Article 23-A analysis of their criminal history)
  2. Disparate Impact Class: (i.e.  all Black and Latinx individuals, who, since January 11, 2020, have had their consumer reports used by the company for driving in New York City and were then denied the opportunity to drive based on criminal history information contained in those consumer reports.

While the class action lawsuit is still unfolding, we strongly suggest employers hiring in New York and New York City review their processes for evaluating background checks in making employment determinations.


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