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Employer Commits Willful Violation of Fair Credit Reporting Act By Including Waiver In Statutorily Mandated Disclosure

February 27, 2017

The Ninth Circuit Court of Appeals has held that including waiver of potential claims language in the same document as the statutorily required Fair Credit and Reporting Act (FCRA) disclosure was a violation of the FCRA. In sum, the Court ruled that the FCRA rights notice cannot be combined with any other notice or agreement. It must be a stand-alone document.

In determining that the violation was “willful,” the Court held that the “ordinary meaning of ‘solely’ is alone; singly or entirely; exclusively.” As such, the employer’s violation of the Act was willful because “where a party’s action violates an unambiguous statutory requirement, that fact alone may be sufficient to conclude that its violation is reckless, and therefore willful.” A willful finding is significant because under FCRA, willful violations allow for the recovery of fines, punitive damages, and attorney’s fees, while negligent violations permit only actual damages

In this instance, an applicant applied for a position and, as part of the application process, he completed a document entitled “Pre-Employment Disclosure Release.” Unlike the “sample” form, this one incorporated language simultaneously authorizing the employer to obtain a consumer report and also releasing potential claims under FCRA. Soon after signing it, the applicant commenced a putative class action alleging that inclusion of the liability waiver in the same document as the disclosure statement violated FCRA which requires, among other things, that the disclosure document consist “solely” of the disclosure.

All employers who perform background checks should carefully review their FCRA disclosure forms to ensure they include only the statutorily required disclosure and permitted authorization form. Inclusion of any other language, could be deemed a willful violation of FCRA.