Back in 2017 the Ninth Circuit Court decided in favor of the plaintiff in Syed v. M-I, LLC, No. 14-17186 (9th Cir. 2017).  The employer included a waiver of liability in the disclosure form, which violated the Fair Credit Reporting Act (FCRA) requirement that no extraneous information be included in the disclosure. After several appeals, Syed won.

Litigation regarding Disclosure and Authorization forms for employment background checks continues to rise. This class action case has been referenced in many cases recently. 

One recent case that references the Syed case, Luna v. Hansen & Adkins Auto Transport, Inc., was just filed last month. The Luna case also referenced Gilberg v. Cal. Check Cashing Stores, LLC, 913 F.3d 1169, 1174. While it was a separate case used as a reference, the Gilberg case also referenced the Syed case.

The Gilberg case, which was another class action case, had two claims. One being the disclosure form that included state notices, and two, that the disclosure form did not meet the stand-a-lone requirement because it was given to her along with other employment documents. On appeal, Gilberg won on the first count, but not on the second.

The Luna claim, also a class action case, was the same as the second claim in the Gilberg case, regarding the disclosure form being provided with other employment documents.

While listing state notices or adding disclaimers violates the FCRA, providing a stand-a-lone disclosure with no extraneous information added, along with an employment application or other employment documents, does not.

In the second claim of the Gilberg case and in the Luna case, the court decided in favor of the defendants. As stated in the Luna case, the court held that the clear and conspicuous requirement “does not prohibit the presentation of the disclosure together with other application materials.”

Both the Gilberg and Luna cases addressed the definitions of words in the FCRA requirement, “document” in the Gilberg case, and “solely” in the Luna case. In both cases, the court found that the definitions of these words were clear and would not be reinterpreted for these cases. The court also found that if they did reinterpret the definitions of these words that it would be difficult for employers to provide employment documents without violating the FCRA requirement. This is good news for employers!

As a reminder employers are required to:

• Tell the applicant or employee that you might use information in their consumer report for decisions related to their employment. This notice (disclosure) 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 (authorization) 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 employee’s employment, make sure you say so clearly and conspicuously.

Make sure that the location where you do business allows for on-going checks with the initial authorization before adding that information to your form.

Additional ASE Resources
Pre-Employment Services - For assistance with your pre-employment process, please contact Susan Chance.

Sources: 

http://cdn.ca9.uscourts.gov/datastore/opinions/2017/03/20/14-17186.pdf

https://cdn.ca9.uscourts.gov/datastore/opinions/2019/01/29/17-16263.pdf

https://cdn.ca9.uscourts.gov/datastore/opinions/2020/04/24/18-55804.pdf

https://www.ftc.gov/tips-advice/business-center/guidance/using-consumer-reports-what-employers-need-know