Dive Brief:
- An employer doesn’t violate the Fair Credit Reporting Act (FCRA) by providing an FCRA disclosure at the same time it provides a job application nor does it violate the federal law by not making an FCRA-required authorization for a background check into a standalone document, the 9th U.S. Circuit Court of Appeals has ruled (Luna v. Hansen and Adkins Auto Transport, Inc., No. 18-55804 (9th Cir. April 24, 2020)).
- The plaintiff, a former employee of a vehicle transportation business, alleged in a putative class action lawsuit that the employer’s practice of providing the FCRA disclosure at the same time as other employment materials and its failure to place an FCRA authorization in a standalone document violated federal law. The law requires that disclosures be "clear and conspicuous" and "in a document that consists solely of the disclosure"; it also only requires that the authorization be in writing.
- A district court awarded summary judgment to the employer, finding that the "co-presentation of the disclosure and an authorization" did not violate the "clear and conspicuous" requirement. The 9th Cir. affirmed the lower court's ruling, rejecting the plaintiff’s attempt to "bootstrap the FCRA’s physical requirement into a temporal one" and noting that nothing required that the disclosure "be distinct in time, as well."
Dive Insight:
Employers — including those that use a third-party agency — must comply with the FCRA when conducting background checks, which means providing a disclosure to the prospective employee that a background check will be run and obtaining authorization for the employer to conduct the background check, experts say.
The law has fairly stringent requirements for disclosures. The disclosure must be in writing and in a stand-alone format, according to guidelines jointly published by the Federal Trade Commission and the U.S. Equal Employment Opportunity Commission (EEOC). The disclosure can only include "minor additional information" that does not take away from the main message.
Alleged failure to comply with disclosure requirements has led to pricey settlements for some employers. Delta Air Lines paid $2.3 million to settle a class-action lawsuit alleging that it failed to provide more than 40,000 applicants the proper background check disclosures required by federal and state law. Frito-Lay settled a similar case for $2.4 million and 7-Eleven agreed to pay nearly $2 million.
However, the requirements for the authorization aren’t so strict. The EEOC noted in its guidance that, while an employer must obtain an applicant’s or employee’s written permission — the authorization — to do a background check, it can be part of the document used to notify the applicant that a background report will be obtained.
Experts previously told HR Dive that employers should follow four steps in creating an FCRA-compliant process:
- Applicants or employees must be notified of the background check;
- The employer must obtain the employee’s or applicant’s written permission;
- The applicant must be provided with a copy of the report and a summary of rights if a decision is made not to hire the applicant as a result of the background check; and
- All recordkeeping requirements relating to document retention and destruction should be satisfied.