07.28.2022 | Newsletters

Employee Background Checks – Compliance with Disclosure Language is Critical

In Hebert v. Barnes & Noble, Inc., the plaintiff job applicant filed a putative class action against retailer Barnes & Noble, contending it willfully violated the Fair Claims Reporting Act (“FCRA”) by providing job applicants with a disclosure that included a footnote with extraneous language unrelated to the topic of consumer reports (i.e., background checks). The plaintiff alleged that this additional language violated the FCRA’s requirement that an employer provides a standalone disclosure informing the applicant that an employer may obtain the applicant’s consumer report when making a hiring decision.

The FCRA permits background checks for purposes of employment so long as employers obtain authorization from the person subject to the background check, furnish an appropriate disclosure, and comply with certification and notice requirements. An applicant can sue for a “willful” violation of the FCRA by showing that the employer’s conduct in violating the FCRA was “intentional” or “reckless,” allowing recovery of statutory damages ranging from $100 to $1,000 per violation.

The appellate court allowed the case to proceed, finding that the plaintiff had produced enough evidence to permit a jury to find that Barnes & Noble had willfully violated the FCRA by including the extraneous language in the disclosure. In its ruling, the court focused on the facts that: (i) one of Barnes & Noble’s employees was aware the extraneous language would be included in the disclosure and had reviewed the disclosure before it was issued; and (ii) Barnes & Noble had used the disclosure for nearly two years prior to the lawsuit.

This case shows the types of conduct on which a court might rely in concluding that an employer’s violation of the FCRA was “willful.” Moreover, it could serve to persuade certain applicants to pursue class-wide FCRA stand-alone disclosure claims. Employers should carefully review the disclosure forms that they provide to all applicants to ensure that they are compliant with the FCRA.

This case also serves as a reminder that there are several California and federal laws that govern the type of information employers can obtain from applicant background checks, and the required disclosures. In addition to the FCRA, some of these applicable laws are the California Consumer Credit Reporting Agencies Act, California Investigative Consumer Reporting Agencies Act, and California Child Protective Act of 1994. Fortunately, these laws allow employers to contract with third-party reporting agencies to fulfill the disclosure requirements. However, it is ultimately the employer’s responsibility to make sure that the reporting agency follows all applicable laws. Employers should ensure that these reporting agencies follow all federal and California laws during their performance, and avoid the pitfalls arising from something as simple as accidentally including superfluous disclosure language.

Related practice team: Labor and Employment

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