Running a background check on applicants and employees seems like good sense. After all, no employer wants to find out, only after a work-related car accident, that it hired a driver with a series of DUIs. However, the state and federal laws governing background screening create a regulatory minefield. The key source of these requirements is the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., which imposes technical and complex obligations on employers, ranging from particular authorizations that must be obtained from the employee, to disclosures that must be made to the employee, to limitations on what information may be included in an authorization and disclosure form, to name just a few. Failure to comply with the FCRA can lead to statutory and punitive damages, plus liability for the opposing party’s attorneys’ fees.
Perhaps due to the attorneys’ fee provisions, in recent years, employers have been bombarded with class actions alleging FCRA violations. A perennial favorite of the plaintiffs’ bar is violation of the “stand-alone disclosure” requirement. The FCRA requires that an employer that intends to obtain a consumer report for employment purposes must notify the applicant of such intent with “a clear and conspicuous disclosure … in a document that consists solely of the disclosure ….” 15 U.S.C. § 1681b(b)(2)(A)(i) (emphasis added). Plaintiffs have brought suit alleging that employers willfully violated the FCRA by using disclosures that failed to comply with this stand-alone requirement, for example, by including waivers of liability. While such a violation of the FCRA may seem minor, it is still a violation, and employers sometimes have been forced to settle or face substantial liability.
