Court Rules Against Employer in Fair Credit Reporting Act (FCRA) Lawsuit

Written By ESR News Blog Editor Thomas Ahearn

In April of 2022, a California court of appeal reversed summary judgment for a defendant employer in a class action lawsuit that claimed an American bookseller with the most retail outlets in the United States “willfully” violated the Fair Credit Reporting Act (FCRA) when obtaining authorization for background checks.

The FCRA – a federal law that governs background checks for employment that took effect in 1970 – requires employers to provide job applicants with a “clear and conspicuous disclosure” in a stand-alone document that
consists solely of the disclosure that a background check may be obtained when making a hiring decision.

Employers may violate the FCRA by providing job applicants with a disclosure that contains extraneous language unrelated to background checks. In this case, the defendant employer used an updated disclosure obtained from a consumer reporting agency (CRA) that was provided as a sample and included a footnote:

Nothing contained herein should be construed as legal advice or guidance. Employers should consult their own counsel about their compliance responsibilities under the FCRA and applicable state law. [CRA] disclaims any warranties or responsibility or damages associated with or arising out of information provided herein.

The defendant inadvertently provided the sample disclosure to job applicants without deleting the footnote. The class action lawsuit filed by the plaintiff claims the footnote is impermissible extraneous information and that the defendant failed to provide a stand-alone disclosure as required under FCRA section § 1681b(b)(2)(A)(i).

The defendant moved for summary judgment in trial court, arguing any non-compliance resulted from an inadvertent error, but the court of appeal reversed and held there was sufficient evidence of recklessness. The opinion of the court of appeal clearly demonstrates the need for employers to comply with FCRA requirements.

Employment Screening Resources® (ESR) is a service offering of ClearStar, a leading provider of background checks, drug testing, and medical screening. ClearStar offers pre-employment screening services that comply with federal, state, and local laws that regulate background checks. To learn more, contact ClearStar today.

NOTE: Employment Screening Resources (ESR) – a service offering of ClearStar – reminds readers that allegations made in class action lawsuits are not proof a business or individual violated any law, rule, or regulation since they are in the pleading stage with no factual adjudications yet.

NOTE: Employment Screening Resources (ESR) – a service offering of ClearStar – does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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