Man Claims Waffle House Broke the Law by Running Secret Background Check on Him

One of the most successful civil rights campaigns of recent years is the international effort to "Ban the Box," a movement that encourages businesses to remove the check box from their applications that asks jobseekers if they have a criminal record.

The idea is to get companies to determine an applicant's qualifications before asking them about possible past convictions. But what if the company gathers information on someone via a third-party company? Beyond Ban the Box, can a company use a third-party service to run a secret background check, and if they're using such a service, do they have to tell the applicant about the investigation?

These are just some of the questions generated by a recent lawsuit against Waffle House, a restaurant chain with more than 2,100 locations in 25 states. Waffle House is being sued by William Jones, who says he applied for a job with the company and was rejected after they discovered he was an ex-convict. Jones contends that Waffle House subverted the Fair Credit Reporting Act by keeping the background checks secretive. Allegedly, Waffle House withheld information about FCRA rights and the reports themselves, and instructed distressed applicants to take up any issues with the agency that ran the background checks.

That agency is called the Source for Public Data and it's the co-defendant in this case. The Source for Public Data contends it's not a consumer reporting agency, and therefore not subject to FCRA rules and regulations.

The About section of the agency's website says:

We remain dedicated to the idea that all citizens of our free society should have access to all of the records that government collects (except information critical to national security and information involved in ongoing criminal investigation). Likewise we will continue to lead the industry in "low cost" real-time access to Public Records.

This summer, U.S. District Judge Roy Dalton denied two Waffle House motions to have the case dismissed and then denied its motion to compel arbitration. Jones actually applied to the chain again (and worked there for six weeks) after filing the suit, and the company claimed he agreed to an arbitration agreement during the second application process. Judge Dalton didn't mince words while addressing this attempt:

The business practice of presigning arbitration agreements effectively allows Waffle House to bury its head in the sand as to the co-signer and disclaim any responsibility for ex parte communications with adverse litigants. … The entire transaction was highly suspect. Without the aid of counsel, Waffle House’s procurement of a binding adhesion contract from a represented party, who was actively engaged in litigation against it, is plainly wrong. Indeed, the whole process by which the waiver was obtained and then sought to be applied to this proceeding has an unsavory aroma.