A rash of class action lawsuits is forcing employers to defend their background check disclosure and authorization forms. The current focus is on disclosure forms that include extraneous information. Here’s what you need to know to lessen your risk of a potential multi-million dollar class action lawsuit.
Fair Credit Reporting Act (FCRA) Disclosure Requirement
If you obtain background check reports from a third-party, such as a consumer reporting agency that provides employment-related screening services, you must comply with the Fair Credit Reporting Act (FCRA). The FCRA, among other things, requires that employers disclose to applicants/employees that a consumer report may be obtained for employment purposes before requesting the report. Specifically, an employer or prospective employer must provide “a clear and conspicuous disclosure” in writing to the individual on whom the report is to be conducted and that disclosure must be “in a document that consists solely of the disclosure.”
It is this stand-alone disclosure requirement that is now the subject of many class action lawsuits. Applicants (and their class-action counsel) scrutinize the background check disclosure forms used by employers and if there is any extraneous information included on the form, they file a lawsuit alleging that the employer violated the FCRA by failing to provide a stand-alone disclosure.
Extraneous Information on FCRA Forms
The text of the FCRA does not define what it means to be a “document that consists solely of the [required] disclosure.” It does, however, state that the required written authorization from the applicant/employee may be included with the disclosure. Consequently, employers may combine the FCRA disclosure with the authorization/consent requirement, but any other information on the form may jeopardize compliance.
In most cases, the courts have refused to dismiss these lawsuits at an early stage, allowing the class representatives to proceed with their allegations of FCRA violations based on these types of extraneous information in disclosure forms. It is unclear whether a judge or jury will ultimately conclude that an FCRA violation exists in these cases, but the affected employers face significant risk of liability as well as the time, expense and public notoriety related to defending these actions in court.
Download the white paper from Pre-employ to learn more about disclosure and authorization forms and how to keep them compliant with the FCRA, including:
- FCRA compliance requirements for disclosure and authorization forms
- How to avoid potential lawsuits during the disclosure and authorization process
- State-specific requirements and how they can vary
- Examples of extraneous information on FCRA forms