No man is an island entire of itself . . . In Meditation XVII John Donne writes of how we are all connected to one another. As human beings, connection with others is essential to our well-being.  However, when it comes to Authorization and Disclosure Forms, it is being an island that is essential to being in compliance with FCRA requirements.

Two important points listed on the Federal Trade Commission’s document, “Using Consumer Reports: What Employers Need to Know” are:

·       Tell the applicant or employee that you might use information in their consumer report for decisions related to their employment. This notice must be in writing and in a stand-alone format. The notice cannot be in an employment application. You can include some minor additional information in the notice, like a brief description of the nature of consumer reports, but only if it does not confuse or detract from the notice.

·       Get written permission from the applicant or employee. This can be part of the document you use to notify the person that you will get a consumer report. If you want the authorization to allow you to get consumer reports throughout the person's employment, make sure you say so clearly and conspicuously.

Note: the states of California and Vermont prohibit the use of authorizations which allow consumer reports throughout the person’s employment.

These steps must be completed before requesting a background check on your applicant.

Many employers believe that they are covered by adding authorization and disclosure information to their employment applications, and/or that they can add a liability waiver, state disclosure, or other information into to the authorization. Unfortunately, this is a mistake that can be costly for those companies as lawsuits regarding improper authorization and disclosure forms have been on the rise the last few years.

Just this past January the Ninth Circuit Court decided in favor of the plaintiff in Syed v. M-I, LLC. [No. 14-17186, ___ F. 3d ___, 2017 WL 242559, at *1 (9th Cir. Jan. 20, 2017)]. This suit was filed because M-I, LLC included a waiver of liability in their authorization form. This case covered three items:

(1) whether a defendant violates the FCRA’s stand-alone disclosure requirement, 15 U.S.C. § 1681b(b)(2) by including a liability release in the disclosure document,

(2) whether including a liability release is a willful violation of the FCRA, and

(3) whether a violation of § 1681b(b)(2) satisfies the concrete injury requirement of Article III.

While a lower court didn’t agree that Syed was able to prove concrete injury, the Ninth Court found that he was able to prove concrete injury along with the other two issues listed in the suit, and therefore, reversed the lower court’s decision and found in favor of the plaintiff.

There are some people who make a career of applying for employment solely for the purpose of finding documents which are not in compliance with the FCRA so they can sue the company. Many companies will settle out of court to avoid the time and hassle of a court battle, and this is what the professional plaintiffs count on. One such person is Cory Groshek, who has won over $230,000 in settlements according to Legal NewsLine.

Sources:  ftc.gov, The Consumer Financial Services Blog - Maurice Wutscher LLP, Clearstar Academy Webinar “FCRA Basics for CRAs and Employers, cdn.ca9.uscourts.gov