A rise in class actions seeking compensation from employers' alleged failure to adequately disclose compliance with the Fair Credit Report Act (FCRA) across the nation has triggered more and more employers to look at their own disclosure process. The plaintiffs allege that employers are in violation of the FCRA because a stand-alone disclosure was not provided before ordering a background check.
FCRA Section 604(b)(2)(A) requires that any person or company obtaining a consumer report (background checks are considered consumer reports by Federal law) first disclose to the applicant "in a clear and conspicuous disclosure...in a document that consists solely of the disclosure" that it intends to obtain a consumer report for employment purposes.
Several recent cases have been ruled that, in the statute, "solely" means "to the exclusion of all else." Employers cannot include applications, liability waivers, or any other document except the disclosure itself.
Employers face substantial and material risk from lawsuits and class actions for similar violations. Every applicant whom an employer provided improper disclosure in the previous 2-5 years can make a claim against that employer. Settlements have reached up to several hundred dollars per applicant, and sometimes even higher.
- Avoid class actions and review your FCRA disclosure today
- The FCRA disclosure should not include any extraneous language, including liability waivers
- The disclosure should not be in the same documents or screens, as the general application
- The disclosure should be on a separate piece of paper from the application
Employers should not assume that because they have used the same disclosure process for years that their process does not need to be reviewed.