Background Check Disclosure/Consent Form That Includes a Liability Waiver Violates the FCRA
On Friday, the Ninth Circuit Court of Appeals issued its opinion in Syed v. M-I, LLC, holding, on an issue of first impression, that an employer willfully violated the Fair Credit Reporting Act (“FCRA”) by including a liability waiver on the background check disclosure and consent form it provided to prospective employees. The Ninth Circuit held that the FCRA expressly states that before obtaining a consumer report for employment purposes, an employer must disclose its intent to secure a consumer report for employment purposes and inform the consumer of his/her rights under the FCRA. The FCRA states that this information must be provided in writing in a document “consisting solely of the disclosure.” The FCRA goes on to state that the employer must obtain the consumer’s authorization to procure the report and that the authorization can be on the same document as the disclosure. In this case, the employer had a disclosure and consent form, as required by the FCRA. However, the employer’s form included a provision stating that the applicant signing the form agrees to release the employer from any and all liability stemming from its reliance on information derived from the consumer report. The Ninth Circuit held that the inclusion of this liability waiver on the disclosure and consent form violated the FCRA’s express mandate that the disclosure consist “solely of the disclosure.” The Ninth Circuit reasoned that the inclusion of extraneous information, such as a liability waiver, in the disclosure form violates the law.
Worse, the Ninth Circuit held, as a matter of law, that the employer’s violation was both “objectively unreasonable” and “willful” (thereby exposing the employer to statutory and punitive damages), even though this was an issue of first impression that no Circuit Court had before decided.
The full text of the Ninth Circuit’s opinion is available here. This case will only serve to promote more FCRA lawsuits against employers. Employers may wish to review their background check disclosure and consent forms to ensure that they do not improperly include “extraneous” information and that they otherwise comply with the FCRA (and California law, as applicable).