Employer that Inadvertently Provided Background Check Disclosure with Footnote to Applicants Faces FCRA Class Action Lawsuit

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Employer that Inadvertently Provided Background Check Disclosure with Footnote to Applicants Faces FCRA Class Action Lawsuit

On April 19, 2022, a California court of appeal ruled against the defendant in a class action lawsuit filed against an employer for allegedly “willfully” violating the Fair Credit Reporting Act (FCRA) requirement that employers provide job applicants with a “clear and conspicuous disclosure” in a stand-alone document when obtaining authorization for background checks.

The plaintiff, who applied to work for the defendant in 2018, filed a putative class action lawsuit against the defendant, an American bookseller with the most retail outlets in the United States, after the defendant’s consumer reporting agency (CRA) emailed the plaintiff a link to a consumer report disclosure that requested her authorization to procure a background check.

Employers may violate the FCRA by providing job applicants with a disclosure that contains extraneous language unrelated to background checks. In this case, the defendant employer inadvertently used an updated disclosure obtained from its CRA that was provided as a sample and included a footnote meant for the employer to read, not any job applicants. The footnote read:

Please note: Nothing contained herein should be construed as legal advice or guidance. Employers should consult their own counsel about their compliance responsibilities under the FCRA and applicable state law. [CRA] expressly disclaims any warranties or responsibility or damages associated with or arising out of information provided herein.

Even though the employer inadvertently provided the sample disclosure to job applicants without first deleting the footnote, the class action lawsuit filed by the job applicant claimed the footnote was impermissible extraneous information and that the defendant failed to provide a stand-alone disclosure as required under FCRA section § 1681b(b)(2)(A)(i).

The employer filed a motion for summary judgment, arguing that no reasonable jury could find its alleged FCRA violation was willful and asserted it included the extraneous information in its disclosure due to an inadvertent drafting error. A trial court agreed and granted the company’s motion for summary judgment and entered judgment in the company’s favor.

However, unlike the trial court, the California court of appeal reversed summary judgment for the employer and concluded that a reasonable jury could find that defendant’s alleged FCRA violation was willful because it violated an unambiguous provision of the FCRA, the “clear and conspicuous disclosure” in a stand-alone document when obtaining authorization.

“At least one of the company’s employees was aware of the extraneous information in the disclosure before the disclosure was displayed to job applicants, the company may not have adequately trained its employees on FCRA compliance, and/or the company may not have had a monitoring system in place to ensure its disclosure complied with the FCRA,” the court found.

“Because a reasonable jury could find that (the defendant’s) alleged FCRA violation was willful, we reverse the judgment and remand the matter with directions that the trial court vacate its order granting the motion for summary judgment and enter a new order denying the motion for summary judgment,” the court of appeal concluded in its ruling.

The Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq is U.S. Federal Government legislation enacted to promote the accuracy, fairness, and privacy of consumer information contained in the files of CRAs and was intended to shield consumers from the willful and/or negligent inclusion of erroneous data in their consumer/credit reports.

ClearStar is a leading HR-technology company specializing in background checks and medical screening. ClearStar offers pre-employment screening services that help employers comply with federal, state, and local laws that regulate background checks in the United States so they may avoid costly and damaging litigation. To learn more about ClearStar, contact us today.

NOTE: ClearStar reminds readers that allegations made in class action lawsuits are not proof a business or individual violated any law, rule, or regulation since they are in the pleading stage with no factual adjudications yet.

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    Thomas Ahearn - News Blog Editor and Public Relations Specialist

    Thomas Ahearn is our News Blog Editor and Public Relations Specialist. Our News Blog provides information about the background check industry to employers, HR professionals, recruiters, and consumers. ClearStar's News covers a variety of topics including Ban the Box, credit reports, criminal records, data breaches, drug testing, Equal Employment Opportunity Commission (EEOC), E-Verify, Fair Credit Reporting Act (FCRA), HR technology, identity theft and fraud, jobs reports, lawsuits involving screening, Millennial workforce, privacy issues, social media background checks, and workplace violence.

    At ClearStar, we are committed to your success. An important part of your employment screening program involves compliance with various laws and regulations, which is why we are providing information regarding screening requirements in certain countries, region, etc. While we are happy to provide you with this information, it is your responsibility to comply with applicable laws and to understand how such information pertains to your employment screening program. The foregoing information is not offered as legal advice but is instead offered for informational purposes. ClearStar is not a law firm and does not offer legal advice and this communication does not form an attorney client relationship. The foregoing information is therefore not intended as a substitute for the legal advice of a lawyer knowledgeable of the user’s individual circumstances or to provide legal advice. ClearStar makes no assurances regarding the accuracy, completeness, or utility of the information contained in this publication. Legislative, regulatory and case law developments regularly impact on general research and this area is evolving rapidly. ClearStar expressly disclaim any warranties or responsibility or damages associated with or arising out of the information provided herein.

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