Luna v. Hansen & Adkins Auto Transport, Inc.

May 25th, 2020 | Angela Preston, Senior Vice President and Counsel, Corporate Ethics and Compliance with Ryan Hannan, Compliance Associate

On April 24, 2020 the US Court of Appeals for the Ninth Circuit affirmed the Central District Court of California’s dismissal of a case in which the plaintiff alleged violations to the Fair Credit Reporting Act’s (FCRA) disclosure requirements for background checks.

In Luna v. Hansen & Adkins Auto Transport, Inc., the plaintiff sued an employer, alleging that the defendant violated the FCRA in the following ways during their preemployment screening process:

  1. By providing the disclosure form simultaneously with other documents, thereby violating “standalone” requirements, and rendering it not “clear and conspicuous”
  2. By failing to place the FCRA authorization on a standalone document, rendering it not “clear and conspicuous”

Dismissal Explanation

  1. The court dismissed the first claim, stating that the disclosure may appear contemporaneously with other documents. Further stating that it satisfies the standalone requirements by being clear and concise, and appears on a distinct page which the applicants can be expected to notice.
  2. The court dismissed the second claim, stating that the standalone requirements of the FCRA do not apply to the authorization as it is separate from the disclosure, and that its format is not dictated by the statute, beyond the requirement that it must be in writing.

Employers must be aware of their disclosure and authorization obligations under the FCRA as it relates to their background screening program.

The full text of the Ninth Circuit’s opinion can be found here.

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