Ninth Circuit Court of Appeals Hands Down Decision Concerning Disclosure Forms

Over the years organizations who utilize background screening to evaluate potential employees or volunteers have become very familiar with lawsuits concerning the Fair Credit Reporting Act’s (FCRA) “standalone” and “clear and conspicuous” disclosure requirements.

The FCRA mandates organizations must provide an individual a “clear and conspicuous” disclosure prior to receiving a background report. The FCRA further requires that the disclosure be “in a document that consists solely of the disclosure.” No matter the intention by an employer, no extraneous information should be included. Over time courts have helped define what is considered “extraneous information”. Some examples would include:

  • Language that claims to release organizations from liability for conducting, obtaining, or using the background screening report
  • A certification from the prospective employee that all information in the application is accurate
  • Overly broad authorizations that permit release of information that the FCRA doesn’t allow to be included in report
  • Wording that purports to require the prospective employee to acknowledge that your hiring decisions are based on legitimate non-discriminatory reasons

Just recently, the Ninth Circuit Court of Appeals handed down another decision concerning disclosure forms that every employer should be aware of. The case, Gilberg v California Check Cashing Stores LLC, concerns a class action filed by a former employee of CheckSmart Financial, LLC. Gilberg signed a disclosure form which stated that CheckSmart may obtain the applicant’s background report, and that the applicant had the right to request a copy of his or her report.

However, the form also included information regarding the applicant’s right to obtain a copy of the report under various state laws. Gilberg alleged that this disclosure violated the FCRA and the Investigative Consumer Reporting Agencies Act (ICRAA) by not issuing a standalone document consisting solely of the disclosure. The additional disclosures pertaining to state laws were extraneous according to the lawsuit.

This case highlights the increasingly narrow interpretations by federal courts when it comes to the FCRA. Any information not pertaining directly to the disclosure should not be included. Both the FCRA and any state mandated disclosures, in this case the ICRAA, should be in separate, standalone documents. They should be entirely distinct from any other application paperwork, including applicable disclosures mandated by other state laws.

Any wording on these forms should be concise and clear, free from any typographical errors, so that even the least sophisticated consumer would not be confused.

It is recommended that any organizations who utilize background screening should do a periodic review of all the forms and procedures they use to ensure they remain compliant with all relevant laws. As always. IntelliCorp recommends that you consult attorneys specializing in these employment law issues.

IntelliCorp offers a library of resources related to background screening. These resources include:

  • Forms
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IntelliCorp takes compliance seriously. Visit our compliance page to learn more.


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