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Ninth Circuit Provides Strict Interpretation of FCRA Background Check Disclosures

Ninth Circuit Provides Strict Interpretation of FCRA Background Check Disclosures

The Ninth Circuit Court recently adopted a decision that may affect those who are subject to the Federal Fair Credit Reporting Act (“FCRA”) as well as California's Investigative Consumer Reporting Agencies Act (“ICRAA”). These laws regulate background screening and provide a framework of requirements that employers must follow when requesting background screening from a consumer reporting agency. Under these laws, prior to obtaining a background screening report (referred to as a consumer report), employers must provide a “clear and conspicuous disclosure” that informs the applicant that the employer may obtain a consumer report for employment purposes. The FCRA and ICRAA also require that the disclosure be in a document that consists solely of the disclosure.

The Ninth Circuit adopted a stricter interpretation of these laws when reviewing Gilberg v. California Check Cashing Stores, LLC. The plaintiff, Desiree Gilberg, is a former employee of CheckSmart Financial, LLC. Before her employment started, the plaintiff signed a background screening disclosure form. In the disclosure, CheckSmart Financial stated that it may obtain her background screening report and that she could request a copy of that report. The disclosure also included information on Gilberg’s right to obtain a copy of the report under applicable state laws. Gilberg claimed that the state law notices were extraneous and violated the FCRA and ICRAA. The Court agreed and also found issue with some of the language in the disclosure, finding that it was not clear and could be confusing to applicants.

By including information on an applicant’s right to obtain a copy of the report under state laws, CheckSmart Financial violated the standalone requirement.

The Ninth Circuit interpreted the “solely” language in the FCRA and ICRAA to mean that no additional information can be included in the disclosure. This includes state-specific disclosures that may be required by law. By including information on an applicant’s right to obtain a copy of the report under state laws, CheckSmart Financial violated the standalone requirement. The Court also determined that the disclosure cannot include any language which may be confusing to a reasonable person regarding his or her rights under the FCRA or ICRAA.

Based on the Ninth Circuit’s holding, the disclosure should not contain any state-specific disclosures and should also use clear language that is easy to understand and not confusing to applicants. AccuSource recommends working with your in-house or outside legal counsel to review your disclosure forms to ensure they are compliant with the Court’s finding. If you would like AccuSource to provide a complimentary review of your current background screening compliance program, please contact us at marketing@accusource-online.com.

Jennifer Daimon, Esq.

Jennifer Daimon, Esq.

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