Walker v. Fred Meyer, Inc: FCRA-Related Litigation

May 22nd, 2020 | Angela Preston, Senior Vice President and Counsel, Corporate Ethics and Compliance with Ryan Hannan, Compliance Associate

On March 20, 2020, the US Court of Appeals for the Ninth Circuit opined on a case that had been dismissed by the District Court of Oregon in 2018. In Walker v. Fred Meyer, Inc., the complaint alleged that the defendant, an employer, violated the Fair Credit Reporting Act’s (FCRA) requirements for background checks in the following ways:

  1. The defendant’s, “Disclosure Regarding Consumer Reports and Investigative Consumer Reports,” was unclear and contained extraneous information
  2. The defendant’s pre-adverse action notice failed to notify the applicant that they could discuss their report directly with the employer

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Explained: Dismissal, Reversal, and Why?

The Circuit Court upheld the District Court’s dismissal of the second count. Stating that the FCRA requires only that the applicant be notified of their right to dispute the accuracy and completeness of their report, with the consumer reporting agency that conducted their background check, in the pre-adverse action notice. Therefore, a right to discuss the report directly with the employer is not required to be disclosed.

The District Court’s dismissal of the first count was reversed however, with the Circuit Court stating that the disclosure did in fact violate the FCRA’s standalone requirements by containing extraneous information. Whereas the District Court opined that additional information can be contained in the disclosure if it is closely related to its contents, the Circuit Court relied on prior rulings in Syed v. M-I, LLC (2017) and Gilberg v. Cal. Check Cashing Stores, LLC (2019) – to affirm standalone requirements, and prohibitions on any extraneous information, respectively. As such, language explaining that applicants could inspect their files, with assistance if needed, and that information obtained via interviews could be disclosed in order to provide a description of the investigations were deemed to have been extraneous. Including such language may “…pull the applicant’s attention away from the privacy rights protected by the FCRA.”

The Ninth Circuit’s opinion further offered guidance that a disclosure should consist only of a plain statement that a consumer report may be obtained, along with a concise description of what that means, what a consumer report is, how it will be obtained, and for what types of employment it may be used. Accordingly, the court decided that the inclusion of “investigative report” language in the disclosure was not considered extraneous, finding that it was a subcategory of a consumer report and was limited in stating only that such a type of report may be obtained along with a brief description.

What Employers Can Learn from This Case:

Employers must be aware of their obligations under the FCRA as it relates to their background screening program. Periodically reviewing their background screening policy and their disclosure forms with their legal counsel will go a long way in fulfilling their obligations, keep them clear and conspicuous, and to meet the requirement that they stand-alone. Sterling’s Client Success Partners are available to walk you through our services offerings to match your business needs.

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

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