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Less is More for Disclosures: 9th Circuit Ruling Favors Simplicity in FCRA Case

With a recent holding of the 9th Circuit in Gilberg v. California Check Cashing Stores, the trend of narrowly interpreting the FCRA’s requirements continues.  In a widely talked-about opinion, the court found that the language in the defendant’s disclosure neither satisfied the FCRA’s “standalone” requirement, nor its “clear and conspicuous” requirement.

Desiree Gilberg is a former employee of CheckSmart Financial LLC.  She, along with a class of other former employees/applicants, signed a “Disclosure Regarding Background Investigation.” The disclosure included information regarding obtaining a background report and her right to request a copy.  It also included her rights under various state laws.  Gilberg alleged that this combination of federal and state law disclosures on one document, along with inconspicuous language contained therein, violated the FCRA.  The court agreed.

The Fair Credit Reporting Act (FCRA) regulates background screening and the process employers must follow when obtaining background screening reports on job applicants. Under the FCRA, employers and other users of consumer reports must provide applicants with a “clear and conspicuous disclosure” informing them that a consumer report may be obtained.  It also requires that the disclosure be “in a document that consists solely of the disclosure.”

The court in this case noted that the FCRA is very clear when it reads “consists solely of the disclosure.”  As such, employers cannot include any additional information, even disclosures required by state law, in the same document that contains the FCRA disclosure.  The court also pointed out that the disclosure was not clear, noting that the form itself said it was “all-encompassing,” and that it lacked proper grammar, which could lead a reasonable person to various interpretations.

Key Takeaways about FCRA Disclosures from the Case

  • The form must be on a separate “standalone” document, completely distinct from everything else, including state disclosures.
  • The form must be simple, easy-to-read, and not contain ambiguous (eg. “all encompassing”) or misleading verbiage.
  • The form must be grammatically correct, so that a reasonable person would not be confused when reading it.
  • Additional information that needs to be communicated to the applicant should not be on the disclosure but can be stated on the authorization form.

This decision is not a surprise and nothing we haven’t heard before.  In fact, we, at Hire Image, have been providing our template forms using separate “standalone” forms for years, with simple, easy-to-follow language that is grammatically correct.  Our state law notices are always on separate documents and clearly labeled as such.  When using our on-line system, applicants are asked where they live and where they will be working and only receive the state notices applicable to them.

In light of this decision (and others like it), employers are reminded they are ultimately responsible for providing the disclosure and authorization forms, despite their background screening provider supplying the forms for them.  Employers are encouraged to keep apprised of caselaw surrounding the FCRA and review their documents to ensure they meet these, and other, FCRA requirements.

Please contact our office if you have any questions about our disclosure forms.  If you are interested in receiving a free review of your forms, please click here for more information.



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