The U.S. Ninth Circuit Court of Appeals recently ruled that an employer complied with the stand-alone disclosure restrictions imposed by the federal Fair Credit Reporting Act (FCRA) despite adding minimal language about what the background check (“consumer report”) entailed, how it would be obtained, and how the information would be used for employment purposes. As an employer, if you use a third party company to gather criminal history or other background information on workers, the FCRA requires you to provide a clear and conspicuous disclosure and obtain workers’ authorization to run the background check. The disclosure and authorization must be in a stand-alone document and cannot contain extraneous information beyond the disclosure required by the FCRA. Applicants brought a class action lawsuit under the FCRA alleging that the company willfully violated disclosure requirements by issuing a “muddled” and “confusing” disclosure that contained extraneous information. The court disagreed. Beyond a plain statement disclosing that a “consumer report may be obtained for employment purposes,” the court said it was fine to include a concise explanation as to what this phrase means. The disclosure satisfied FCRA requirements because it wasn’t overshadowed by the additional information, which furthered the purpose of the disclosure by helping the applicant understand it (Walker v. Fred Meyer, Inc., 9th Cir, March 2020).
Tips: Interestingly, the court also ruled that when you send the FCRA notice of potential adverse action (stating that you intend to deny employment because of a negative background check), the candidate has a right to dispute inaccuracies with the consumer reporting agency but not with you as the employer. This is a fair point, since it’s the agency that compiled the report. However, it’s still helpful to invite the candidate to let you know of any errors (or give an opportunity to explain), so you have the option to reconsider if that seems like the right thing to do. Be sure to consult with your Vigilant Law Group employment attorney if you have any concerns about your processes and forms for pre-employment background checks. Also check out our Legal Guide, Background Checks: Simple Third-Party Reports and Model Forms, Background Checks: Federal Notices and Background Checks: California Notices.