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The Ninth Circuit, Once Again, Addresses FCRA Disclosure and Authorization Requirements

The Ninth Circuit Court of Appeals has recently issued a few well-publicized decisions on Fair Credit Reporting Act (“FCRA”) disclosure and authorization requirements. We have previously discussed two marquee decisions, Gilberg v. California Check Cashing Stores, LLC and Walker v. Fred Meyer, Inc., both of which provide employers with valuable insight into what may or may not be allowed in their background report disclosure and authorization forms.

As most employers know, the FCRA has specific disclosure and authorization requirements before an employer can obtain a background report from a consumer reporting agency, like Verified Credentials, for employment purposes. You can check out a quick refresher on these requirements here.

To add to the ever-expanding list of court decisions interpreting the FCRA’s disclosure and authorization requirements, the Ninth Circuit has recently issued its opinion in Luna v. Hansen and Adkins Auto Transport, Inc.

According to the decision, the employee that brought a suit against his employer alleged that the employer violated the FCRA’s disclosure and authorization requirements “by providing a FCRA disclosure simultaneously with other employment materials, and by failing to place a FCRA authorization on a standalone document.”

The Ninth Circuit disagreed with these arguments and upheld a previous summary judgment decision in favor of the employer, stating that the employee’s arguments are “thwarted by the statute itself.”

In addressing the employee’s arguments, the Ninth Circuit provides some useful interpretations of the FCRA’s disclosure and authorization requirements:

  • “But nothing [in a previous Ninth Circuit opinion on disclosure and authorization requirements] can be read to prohibit an employer from providing a standalone FCRA disclosure contemporaneously with other employment documents.” The employee’s argument that the employer violated the standalone disclosure provision of the FCRA by “presenting the disclosure together with other application materials… stretches the statute’s requirements beyond the limits of law and common sense.”
  • The employer’s disclosure, which contained a brief notice and “employer logos and signature lines” was both “clear and conspicuous” which the Ninth Circuit has interpreted to mean “’a reasonably understandable form’ that is ‘readily noticeable to the consumer.’”
  • The employee’s argument that “co-presentation of the disclosure and authorization renders the disclosure neither clear nor conspicuous” was struck down by the court, which stated that “…applicants, such as big-rig truckers, can be expected to notice a standalone document featuring a bolded, underlined, capital-lettered heading.”
  • The court rejected the argument that the employer violated the FCRA by “failing to put the authorization in a clear and conspicuous, standalone document.” The court states, “FCRA dictates only that a consumer authorization be ‘in writing,’ without specifying its format.” The court also notes that “Crucially, the authorization subsection of the FCRA lacks the disclosure subsection’s standalone document requirement.”

The Luna decision provides employers with some helpful insights into FCRA disclosure and authorization requirements. Keep in mind that this decision only impacts jurisdictions within the Ninth Circuit. However, even though the direct impact may be limited to the Ninth Circuit, the court’s interpretations should still give employers enough to consider when crafting their disclosure and authorization forms.

Please consult with your legal counsel to follow and apply the latest court interpretations of the FCRA. They can help you make sure that your employment practices fit in with the latest FCRA-related court decisions and opinions.

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