Two current court cases, one to be decided in the U.S. Supreme Court, could lead to substantial new changes in the way employers must notify applicants and/or employees that they will be obtaining background checks on them.
In order to comply with the Fair Credit Reporting Act (FCRA), employers must, before they obtain a background check on an employee or applicant, provide each applicant with a “clear and conspicuous disclosure that a background check may be obtained for employment purposes, that consists solely of the disclosure in a standalone document.” This means that the employer cannot bury the FCRA disclosure somewhere within an employment application, nor can the disclosure contain information that does not pertain directly to the disclosure. If either one of those things happens, the employer can be found to be in willful violation of the Fair Credit Reporting Act. In a current court case, the definition of “directly related to the disclosure” is once again being debated.
In Lagos v. The Leland Stanford Junior University, Thomas Lagos, an applicant for a job with the Leland Stanford Junior University, claimed that the FCRA Disclosure he was provided with violated the FCRA. Lagos alleged that the violation occurred when the disclosure contained multiple notices of additional rights he had in other states, as well as notices of rights he had under the FCRA. (Several states including California, Minnesota, Oklahoma and New York require that applicants be informed that they have additional rights when they are undergoing a pre-employment background check.)
The employer submitted a motion to dismiss, but the judge dismissed the motion on the grounds that the state notices included in the disclosure were not “closely related” to the Fair Credit Reporting Act, and they did not “focus the consumer’s attention on the disclosure.”
Although providing these notices is a requirement of state and federal law, it is extremely important for employers to be aware that there are two different sets of notices. Once set directly relates to the FCRA, and one set relates to the applicant’s rights regarding pre-employment screening in those states.
Some notices from states relate directly to the Fair Credit Reporting Act, such as one in Minnesota that allows an applicant to receive a copy of his or her consumer report if the employer obtains one. However, there are also notices required by some states that do not directly relate to the Fair Credit Reporting Act. An example would be one in New York state which empowers the applicant to be informed, upon request, as to whether the employer requested a consumer report and, if so, which consumer reporting agency prepared it.
The U.S. District Court of Northern California has stayed the Lagos case until the U.S. Supreme Court makes a decision in Spokeo v. Robins. In that case, the Court will decide whether a lawsuit can be made against a company that violates federal privacy law when the plaintiff suffers no concrete harm.
While Michigan does not specifically require any similar such notices, Michigan employers who employ people in other states need to make sure their employment documents avoid the pitfalls described above. Further, all employers should watch these two cases closely, since their outcomes could greatly affect the manner in which Disclosures are deemed compliant with the Fair Credit Reporting Act.
Sources: Consumer Financial Services Law Monitor – Troutman Sanders
; Workforce Compliance Insights – Arnall Golden Gregory LLP Attorneys at Law
; Epic.org https://www.epic.org/amicus/spokeo/