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Important opinion addressing the background screening disclosures that employers are required to provide under state and federal law

February 6th, 2019 | Sterling

The Ninth Circuit Court of Appeals has issued an important opinion addressing the background screening disclosures that employers are required to provide under state and federal law.

On Wednesday January 30, 2019, the Court issued an opinion in the case Gilberg v California Check Cashing LLC, holding that users of consumer reports may violate both the Fair Credit Reporting Act (FCRA) and California’s Investigative Consumer Reporting Agencies Act (ICRAA) if they include “extraneous” and “confusing” language in background screening disclosures.

Both the FCRA and ICRAA require employers and other end users to provide a “clear and conspicuous disclosure” that a consumer report may be obtained, and require that the disclosure be in a document “consisting solely of the disclosure.”

According to the Ninth Circuit, the objectionable language in the Gilburg case consisted, in part, of state-specific disclosures that the court deemed confusing and unclear. The court cited another Ninth Circuit opinion, Syed v. M-I, LLC, which had found that a prospective employer violates the FCRA when it includes a liability waiver in the same document as the statutorily mandated disclosure. The FCRA, 15 U.S.C.§ 1681b(b)(2)(A), states:

  • a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless a clear and conspicuous Disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured
  • the document should consist “solely of the Disclosure”

The Ninth Circuit takes issue with both state-required disclosures and language limiting liability, as well as any other “extraneous” language that is likely to confuse a reasonable person. The court ruled that the while the disclosure was conspicuous, it was not clear.

This recent case demonstrates that Disclosure and Authorization forms continue to be challenged in the courts, and we continue to see background screening lawsuits that are being filed against employers for technical form violations under both FCRA and ICRAA.  Any non-essential language that may detract from the clear purpose of the disclosure should be carefully considered.

Sterling strives to provide clients with the most current information regarding background form compliance. For your convenience, you may find current sample forms located on this page: https://www.sterlingcheck.com/resources/compliance-documents/.

Employers are responsible for the content of their forms, and we encourage you to review your FCRA Disclosure and Authorization forms and reference the samples provided. 

As with any sample forms, we advise you to review them with your own counsel prior to use.

This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.