Ninth Circuit Confirms That FCRA Disclosure May Be Included as Part of Employment Packet

By Joseph A. Kroeger and Audrey E. Chastain

On February 7, 2019, we reported here that the Ninth Circuit Court of Appeals confirmed that an employer violates the Fair Credit Reporting Act’s (“FCRA”) stand-alone disclosure requirement when it provides job applicants with a disclosure that also contains reference to various state and federal disclosure requirements. However, the Ninth Circuit recently delivered what may be considered good news for employers on the FCRA front. On April 24, 2020, the Ninth Circuit held that an employer does not violate the stand-alone disclosure requirement when it provides a stand-alone disclosure at the same time as other employment application documents. This may be a welcome development for employers and consumer reporting agencies (“CRAs”) within the Ninth Circuit and puts to rest an argument frequently employed by plaintiffs in class action lawsuits under the FCRA.

In Luna v. Hansen & Adkins Auto Transport, Inc., the Ninth Circuit rejected the plaintiff’s “more novel than most” theory that the employer violated the FCRA when it provided the disclosure simultaneously with other employment materials as part of a multi-form, multi-page employment application. The Court held that the statutory language of the FCRA does not impose a temporal requirement that prohibits employers from providing prospective employees the stand-alone disclosure contemporaneously with other employment documents. The plaintiff’s argument, the Court held, “stretch[ed] the statute’s requirements beyond the limits of law and common sense,” as “no authority suggests that a disclosure must be distinct in time” and no authority “supports the proposition that the word ‘document’ as used in [the] FCRA, encompasses the universe of employment application materials furnished by an employer to a prospective employee.” (internal quotations omitted). To hold otherwise, the Court emphasized, would prevent an employer from ever providing an applicant with written application materials, that include an FCRA disclosure, without violating the FCRA’s stand-alone disclosure requirement.

Here, the employer’s disclosure complied with the FCRA because it explained, in plain and bolded language in a stand-alone document, that the applicant was “informed that reports verifying your previous employment, previous drug and alcohol test results, and your driving record may be obtained on you for employment purposes,” underneath a bolded, underlined and capital-lettered heading: “FAIR CREDIT REPORTING ACT DISCLOSURE STATEMENT.” As the Court noted, applicants could be expected to notice such a disclosure, amidst the materials included in the employment application.

Additionally, the plaintiff argued that the employer violated the FCRA when it failed to put the authorization to conduct the background check in a clear and conspicuous, stand-alone document. The Court disagreed, finding that the co-presentation of the disclosure and authorization rendered the disclosure neither unclear nor inconspicuous. Moreover, the plaintiff’s argument was “thwarted by the statute itself” because nothing in the FCRA requires that an authorization be put in a clear and conspicuous, stand-alone document, but only that it be “in writing.” See 15 U.S.C. § 1681b(b)(2)(A)(ii).

How does this decision impact Ninth Circuit employers and CRAs? Although employers and CRAs may still want to be extremely cautious about including any extraneous language in the stand-alone disclosure, under this decision, employers and CRAs may distribute the stand-alone disclosures as part of a larger employment application packet. However, as a best practice, employers and CRAs may want to consider ensuring that the FCRA disclosure includes bolded, underlined, and/or capital-lettered language and is on a separately-numbered page of an employment application, in an effort to be crystal clear that the disclosure is distinct and “stand-alone” from the other materials in the employment application packet.

For more information, the Luna decision can be found here.