A recent California Court of Appeal decision highlights the importance of following Fair Credit Reporting Act (FCRA) guidelines when it comes to background check disclosures. A grant of summary judgment in the defendant’s favor was reversed and remanded over a triable issue of fact around whether the defendant had “willfully” violated FCRA standalone disclosure requirements. (Hebert v. Barnes & Noble, Inc.).

Employers using consumer reports for employment-related purposes must comply with consumer reporting mandates under the California Labor Code and the FCRA. These laws govern the employer’s ability to obtain consumer information through in-house investigations and its use of information obtained through third-party consumer reporting agencies (CRA). Background checks are permitted under the FCRA for purposes of employment so long as employers obtain authorization from the applicant or employee, they furnish an appropriate disclosure and comply with certification and notice requirements.

At issue in the Hebert case was whether the defendant had willfully included extraneous information in its disclosure. In ordering the remand, the Court opined that a reasonable jury could likely find a willful violation under the FCRA based on the following:

• At least one of Defendant’s employees was aware of the extraneous information in the disclosure before the disclosure was displayed to job applicants.
• The Defendant may not have adequately trained its employees on FCRA compliance; and/or
• Defendant may not have had a monitoring system in place to ensure its disclosure complied with the FCRA.

The FCRA requires an “employer who obtains a consumer report about a job applicant first [to] provide the applicant with a standalone, clear and conspicuous disclosure of its intention to do so, and [to] obtain the applicant’s consent. . ..” (citation omitted).

Employers must be mindful of FCRA disclosure requirements to provide notice of the employer’s intent to obtain a consumer report in a “document that consists solely of the disclosure” and nothing else. This places a clear burden on the employer to provide a clear and conspicuous written disclosure (in a separate, standalone document) that tells the individual that information found in the background investigation might be used for decisions about their employment. It is important to note that even the inclusion of information closely related to FCRA disclosure requirements (e.g., state rights disclosures) can violate the federal mandate that the notice consist solely of the disclosure.

To lower the risk of willful violation claims associated with standalone disclosure notice requirements employers should audit and update their FCRA disclosure and authorization forms. 

Members with questions about FCRA standalone disclosures should contact Western Growers.