The following article was written by Montserrat Miller, co-chair of Arnall Golden Gregory’s Background Screening Industry Group, and is being published here with her permission.  Ms. Miller’s blog, Workforce Compliance Insights, covers legal issues, developments and noteworthy events in two areas. First, the background screening industry, including both users of background checks as well as providers of the reports. Second, immigration compliance and specifically the Form I-9 and E-Verify.

The on-going discussion about what is permissible in a disclosure and authorization notice (hereinafter “notice”) for Fair Credit Reporting Act (FCRA) purposes continues. In a recent federal district court case in the Northern District of Court of California (Thomas Lagos v. The Leland Stanford Junior University, 5:15-cv-04524) the judge dismissed Defendant’s motion to dismiss on the grounds that the state disclosures included with the notice could potentially mean it is not a “clear and conspicuous disclosure.”

Quick Background

Under the FCRA employers have an obligation to provide the job applicant with a “clear and conspicuous” written notice, in a stand-alone document, explaining to the job applicant that a background check will be conducted for employment screening purposes. Thereafter the employer must secure the job applicant’s written authorization for said background check.  (15 U.S.C. § 1681b(2)(A))  Separately, several states require that certain notices be provided by the employer with respect to a pre-employment screening background check to advise residents of additional rights.  For instance, California, Minnesota, Oklahoma and New York.

Litigation Posture

Plaintiff’s bar has been attacking the validity of the Notices employers provide on the grounds that they are not a “clear and conspicuous disclosure” and in a stand-alone document under the FCRA.  This hinges on the argument that certain language in the Notice is extraneous, and the courts have held that in certain situations some language in the Notice can be extraneous, such as release of liability language.

Stanford Case

This case is currently stayed pending the Supreme Court’s decision in Spokeo v. Robins.  However, earlier in the proceedings the judge refused to grant Defendant’s motion to dismiss stating that the Plaintiff alleged facts sufficient to state a facially plausible claim for relief.  Stanford’s notice included seven state law notices informing applicants of additional rights under state law.  It also included a sentence related to the offer of employment. The judge stated that the state disclosures combined with this one sentence “plausibly” violated section 1681b(b)(2)(A)(i)’s requirement for the notice to be in a document consisting “solely of the disclosure” because they are not “‘closely related’” to the FCRA disclosure.  The judge stated that “it therefore is unclear how the state law notices contribute to the disclosure required by the FCRA.” (Order Denying Motion to Dismiss, p. 4)

Stanford’s notice included the following in this order: the Consumer Disclosure and Authorization Form (separate page); Additional State Law Notices (CA, ME, MA, MN, NJ, NY, WA) (on two, separate pages); Authorization of Background Investigation (separate page); A Summary of Your Rights Under the Fair Credit Reporting Act; California summary of rights; New Jersey summary of rights; New York Article 23-A; Washington summary of rights.

Montserrat Miller is a partner in the Privacy and Consumer Regulatory; Immigration; and Government Affairs Practice Groups at Arnall Golden Gregory. She assists clients with privacy and data protection-related matters, including counseling and defending companies regarding their compliance under the Fair Credit Reporting Act (FCRA), Driver’s Privacy Protection Act, Gramm-Leach-Bliley Act, Children’s Online Privacy Protection Act and state data breach statutes. Ms. Miller’s practice includes a special emphasis on the use of criminal and credit history information and compliance with the FCRA, Title VII of the Civil Rights Act of 1964 and state laws which impact the use of background checks for employment screening and tenancy purposes.