Employers, beware: a recent rash of class action suits regarding Fair Credit Reporting Act (FCRA) violations, specifically regarding disclosure provisions, poses new compliance requirements for materials you distribute to prospective employees. A common theme finds plaintiffs alleging that a defendant employer failed to make a proper disclosure, which requires any consumer report procured for employment purposes to contain in writing a clear and conspicuous disclosure, in a document consisting solely of the disclosure. It is clear from recent cases that courts specifically are growing intolerant of disclosures that contain language waiving an employer's liability. When it comes to FCRA compliance, the message from courts to employers is clear – less is more.
Employers should review any materials they provide to applicants in connection with pulling credit or other consumer reports, and carefully review for adherence to proper disclosure requirements.
Recent FCRA Allegations Against Employers
In one recent case, the inclusion of additional information in the disclosure created potential legal liability for the employer. In Jones v. Halstead Management Co., LLC, the company included various other acknowledgements and waivers within the disclosure statement. Earlier this year, the district court denied the Defendant's motion to dismiss, stating: "The statute requires a standalone disclosure; the only extraneous information permitted is an authorization by the consumer to the employer to obtain the report." Since the disclosure and authorization was not a "standalone disclosure" and included various other pieces, Plaintiff's Amended Complaint was held to state a claim for relief. The case is currently pending.
Another recently-settled class action found the plaintiff alleging that a defendant employer violated the FCRA by presenting its employees with two forms simultaneously: a disclosure statement and a consent/release of information. Since presented for review together, Plaintiff alleged that both statements must be in strict compliance with the FCRA. The consent form contained the "traditional" authorization language alongside a boilerplate waiver of liability. Plaintiff alleged that the inclusion of this waiver in the consent form, presented at the same time as the disclosure, violated the FCRA. Plaintiff sought both statutory damages and punitive damages, alleging the violations were willful. Prior to settlement, the court denied Defendant's motion to dismiss, finding that the allegations outlined above stated a claim for relief.
Adding to the deluge, Big Lots was hit with a class action in Illinois less than two weeks ago, with the Plaintiff claiming that the retailer's FCRA form contained "extraneous information" and alleging that the form did not consist "solely" of a disclosure.
FCRA: Requirements for Compliance
To comply with the FCRA notice and disclosure provisions contained in 15 U.S.C. § 1681b(b)(2)(A)(i)-(ii), the employer must provide "a clear and conspicuous disclosure," in writing, in a document that consists solely of the disclosure. This requires the disclosure to be contained in a singular, standalone document, with no extraneous information.
For More Information
For a review of your employment policies or documentation, please contact the author, a member of the firm's Labor and Employment practice, or your Polsinelli attorney.