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Recent Court Decision Finds No Standing for Lawsuit Regarding Extraneous Information on Disclosure Forms

  September 25, 2017

Non-compliance by employers with Fair Credit Reporting Act (FCRA) regulations is a good way to attract attention from the Equal Employment Opportunity Commission (EEOC) and litigators. Continually reviewing background screening procedures and the forms that come along with that process is vital to remaining compliant and staying away from expensive legal action. 

Two FCRA provisions that have attracted a lot of attention by the EEOC and litigators alike are the following: 

  • The employer provides a clear and conspicuous disclosure to the applicant, in a stand-alone document that consists solely of the disclosure
  • The applicant authorizes in writing the procurement of the report 

In the last few years, several companies have faced legal action over these provisions by including “extraneous information”, such as a liability release, on their disclosure and authorization form. Earlier this year, the Ninth Circuit Court of Appeals ruled in favor of the plaintiff (Syed v. M-I, LLC) that inclusion of a liability release in an employment background check disclosure is a willful violation of the FCRA, subjecting the employer to expensive statutory and punitive damages and this kind of violation results in a concrete harm that satisfies Article III standing. That decision should have put all employers on notice and to review their disclosure forms. 

Recently however, another decision has come from the Seventh Circuit Court of Appeals that considered many of the same issues, and ruled in favor of the defendant. In Groshek v Time Warner Cable, Inc., No. 16-2711, the Seventh Circuit held that a plaintiff, who alleged extraneous information in a background check disclosure form, without alleging concrete harm, lacks the necessary Article III standing to maintain a lawsuit. Simply alleging that the disclosure forms contained extraneous information does not, by itself, give standing. 

The two cases cited reinforces that this specific issue is still up for debate and will likely continue to spur lawsuits. Companies should do all they can to ensure their background check forms comply with the FCRA. 

Here is more information regarding this decision:

Seventh Circuit Finds No Standing When Background Check Disclosures Contain Extraneous Information  

Learn more about the background screening products & services available at IntelliCorp.

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