Lately, class-action lawsuits under the Fair Credit Reporting Act (“FCRA”) have become increasingly common–the most common claim being that the employer’s background check disclosure and authorization forms are not compliant with the FCRA because they contain “extraneous” information. These are usually convoluted legal arguments that may relate to any number of things included in your organization’s disclosure and authorization forms, so it is important to review your Disclosure and Authorization forms with your legal counsel on a regular basis to ensure that they comply with new developments in this rapidly changing area of the law.
To help to get you started with your review, here is an overview of the FCRA’s basic requirements for compliant Disclosure and Authorization forms, as well as a list of common mistakes employers have made with their Disclosure and Authorization Forms.
FCRA Basic Requirements
It’s always good to start with a review of the basics. Section 604(b)(2)(A) of the FCRA outlines your obligations as an employer to provide a job applicant or employee a “disclosure” and get their “written authorization” to obtain a background check. Before ordering a background check:
- You must make a clear and conspicuous disclosure to the job applicant or employee in writing – “in a document that consists SOLELY of the disclosure” – that a consumer report may be obtained (FCRA Section 604(b)(2)(A)(i)); and
- You must get the job applicant or employee’s written authorization to obtain the report (FCRA Section 604(b)(2)(A)(ii)).
Common Disclosure and Authorization Form Errors
The FCRA’s requirements outlined above only serve as a starting point for your compliance review. Additionally, you increase your risk of a lawsuit if your background check “disclosure”:
- Is combined with a liability waiver and/or ANY other wording not exclusive to the sole purpose of disclosing your organization’s intent to perform a background check (such as “at will” language, state law disclosure information or other language). Many claims allege that ANY other information contained in the disclosure document may be deemed “extraneous.”
- Includes a question (or check box) asking about an applicant’s criminal history. As the number of states, counties, and cities that have enacted “Ban-the-Box” laws or ordinances continues to grow, any question asking about an applicant’s criminal history is a red flag. When such questions are included on an organization’s disclosure and authorization forms, they could be considered “extraneous” information not permitted by the FCRA and may violate state or local law (if applicable). As a result, your disclosure and authorization forms should never request information regarding an applicant’s prior convictions.
- Does not contain a separate document addressing “investigative consumer reports.” If your organization uses “investigative consumer reports,” you are required to provide an additional disclosure notifying the applicant that an investigative consumer report may be obtained. This disclosure should be separate from the original disclosure form.
For reference, FCRA Section 603(e) defines an “investigative consumer report” as any information on a consumer’s character, general reputation, personal characteristics, or mode of living that is obtained through personal interviews with neighbors, friends, or associates of the applicant.
- Does not contain the name and contact information of the background screening company procuring the consumer report. This is a common error for employers who have recently switched their background screening provider, as the contact information for their previous provider is inadvertently not updated.
- Is part of your organization’s employment application. The goal is to make sure that the disclosure is presented in a clear manner so that the applicant understands what it is they are signing. By including the disclosure and authorization forms as part of an employment application or by combining the disclosure and authorization forms with any other documents, it becomes more likely that the applicant will rush through the forms without paying attention to what it is they are authorizing.
- Does not contain the definition of a consumer report. Remember, the FCRA defines a consumer report as any information bearing on a consumer’s character, general reputation, personal characteristics, and mode of living. Your organization’s disclosure form should include this definition (FCRA Section 603(d)).
- Does not state the specific types of information that will be collected about the applicant. For disclosure and authorization forms, one size does not fit all. Your organization’s disclosure should specify the actual scope of the background investigation being requested, which should be limited to only the information that the employer intends to obtain regarding the applicant.
- Does not reference the “Summary of Rights” as a separate document. The document titled “Summary of Your Rights Under the Fair Credit Reporting Act” is required to be provided to applicants with the Disclosure and Authorization forms. Your organization’s Authorization form should ask the applicant to acknowledge receipt of the Summary of Rights.
Note: You can locate the most recent version of the “Summary of Your Rights Under the Fair Credit Reporting Act” here.
- Is printed in tiny and/or illegible type. Disclosure and Authorization forms presented in “fine print” violate the FCRA’s requirement that such documents be “clear and conspicuous.”
- Does not contain state-specific disclosures. Several states, including California, Minnesota, New York, Oklahoma, Vermont, and Washington, have their own requirements that must be disclosed to applicants. This information should be provided separately from your organization’s original disclosure form. Most employers will include these notices in their authorization forms.
Do any of these errors sound familiar? If so, we strongly recommend that you take a hard look at your current forms and consider updating. Since employers have the responsibility for using compliant Disclosure and Authorization forms, we strongly recommend that your organization consults its legal counsel about its responsibilities under the FCRA and applicable state law.
If you have any questions, please contact us by phone at 800-790-1205 and choosing option 4, or by sending an email to firstname.lastname@example.org.
Written by Ashley Esparza Sykes, J.D.
Ashley Sykes is a labor and employment specialist and serves as the Vice President of Compliance and Government Relations at Global HR Research. Ashley manages and oversees GHRR’s procedures for compliant record and information reporting and helps to ensure that all of GHRR’s and its clients’ processes remain compliant with the ever-changing legal landscape of the employment screening industry.
This publication is intended for general informational purposes and should not be construed as legal advice or a legal opinion. We strongly recommend that you consult your legal counsel regarding your own organization’s situation and any specific legal questions you might have.