FCRA – Disclosure Requirements

A recent case reminds employers of the importance of complying with the Fair Credit Reporting Act’s very technical disclosure requirements. As we previously discussed in our January 2016 E-Update’s Top Tip, the FCRA applies where an employer uses a third-party consumer reporting agency to conduct background checks (including criminal and credit checks) on its applicants and/or employees.  The FCRA requires, among other things, that before conducting any background check, the employer provide to applicants a “clear and conspicuous disclosure” in writing that informs them that a consumer report (i.e. background check) may be obtained for employment purposes. The FCRA also requires that the employer obtain written authorization from the applicant to conduct the background check. The disclosure must be in a document that consists solely of the disclosure, or the disclosure and the authorization only. In Syed v. M-I, LLC, the disclosure form also included a liability waiver, by which the applicant waived his rights to sue the prospective employer and its agents for any FCRA violations. The U.S. Court of Appeals for the Ninth Circuit found that the inclusion of this waiver violated the FCRA.