Two Recent Court Cases on the Disclosure and Authorization

At the risk of being a broken record (for you youngsters, records preceded online music and CDs and when they got a scratch might play the same thing over and over again) we want to address the disclosure and authorization issue. As you know, this is perhaps the most litigious area in the use of background checks.

There were two recent cases and we’ll discuss them below, but if you are short of time read these two bullets:

  • Keep your Disclosure to your applicant simple and do not bundle it with other stuff.
  • Your authorization should be simple too, but it is not as crucial as the disclosure if you want to add minimal information that might be beneficial to the applicant.

The cases:

(Walker vs Fred Meyer) in the 9th circuit court.

In short, “the court addressed the standalone disclosure, and found that an employer may provide a “concise explanation” of what the consumer report may be used for. The Court held that “beyond a plain statement disclosing ‘that a consumer report may be obtained for employment purposes,’ some concise explanation of what the phrase means may be included.” In other words, an employer may concisely explain to an applicant or employee what the report entails, how it will be obtained, and for which type of employment purposes it may be used

However, the Court disapproved of two other portions of the employer’s disclosure, which explained: how an applicant may inspect the Credit Reporting Agency’s (“CRA”) files, how the CRA will help the applicant understand the files, and if the CRA obtains any information by interview, that the applicant has the right to obtain a disclosure of the scope and nature of the investigation performed. The Court found these statements could pull an applicant’s attention away from his privacy rights protected by the FCRA, were more than merely a ‘concise statement’ and therefore violated the FCRA’s ‘standalone’ requirement.

Notice that the disapproved portions might be beneficial or of interest to the applicant. That doesn’t matter. The disclosure must zero in on solely the disclosure.

(Luna v. Hansen & Adkins Auto Transport, Inc.,)

In short, this case drew a distinction between the FCRA requirements applicable to a disclosure versus an authorization form. Plaintiff Luna alleged that Defendant-employer violated the FCRA by (among others) failing to place the FCRA authorization on a standalone document. There, the authorization appeared at the end of the employment application and included other notices, waivers, and agreements, unrelated to acquiring the consumer report.
The Court rejected Plaintiff’s argument that, by including the authorization form within the employment application and among other waivers, the Defendant-employer violated the FCRA’s ‘standalone’ requirement. Instead, the Court held that the “standalone” requirement only applies to the disclosure form, not the authorization.

We recommend you review your disclosure and authorization documents, particularly your disclosure, and ensure there is not extraneous language. You can certainly still provide that information to your applicant—just don’t put it on the disclosure and be judicious on how much you put on the authorization. Another informational document might be in order.

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