Labor & Employment Law Daily FCRA’s standalone disclosure requirement violated by inclusion of state disclosure requirements
Thursday, January 31, 2019

FCRA’s standalone disclosure requirement violated by inclusion of state disclosure requirements

By Kathleen Kapusta, J.D.

Citing to Syed, the Ninth Circuit explained that the FCRA means what it says: the required disclosure must be in a document that consists solely of the disclosure. Inclusion of state-mandated disclosure information undermined the FCRA’s purpose.

A prospective employer violates the Fair Credit Reporting Act’s standalone document requirement by including extraneous information relating to various state disclosure requirements in that disclosure, the Ninth Circuit held, affirming in part and vacating in part the grant of summary judgment against an employee’s putative class action. Further, while the disclosure at issue satisfied the FCRA and California’s Investigative Consumer Reporting Agencies Act (ICRAA) requirements for conspicuousness, it was not clear (Gilberg v. California Check Cashing Stores, LLC, January 29, 2019, Fisher, R.).

Two weeks after completing a three-page form containing an application, a math screening, and an employment history verification, the applicant signed a separate form entitled “Disclosure Regarding Background Investigation.” That form contained not only a disclosure as required by the FCRA stating that the prospective employer could obtain a consumer report on her, it contained additional disclosure requirements for seven other states.

Hired, quits, sues. After receiving the signed disclosure form and obtaining a criminal background report, the check cashing company hired the applicant. Five months later, she quit and then brought a putative class action alleging the employer failed to make a proper disclosure under both the FCRA and the ICRAA. Granting the employer’s motion for summary judgment, the district held that its disclosure form complied with both statutes.

Relevant disclosure form. On appeal, the court first rejected the employee’s assertion that the relevant document included every form she filled out in the employment process—a total of four pages. While she argued that under California contract law, “[s]everal contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together,” the court declined to extend this principle to the FCRA’s definition of a document. Under her proposed interpretation, the court wrote, “it is difficult to see how an employer could ever provide an applicant written application materials without violating FCRA’s standalone document requirement.”

It means what it says. Nonetheless, the form violated the FCRA’s standalone document requirement. In so holding, the court cited its 2017 decision in Syed v. M-I, LLC, which held that “a prospective employer violates Section 1681b (b)(2)(A) when it procures a job applicant’s consumer report after including a liability waiver in the same document as the statutorily mandated disclosure.” Noting the statute’s plain language, the Syed court concluded that the FCRA meant what it said: the required disclosure must be in a document that “consist[s] ‘solely’ of the disclosure.”

The employer, however, argued that Syed was not applicable because the surplusage in that case involved a liability waiver while the disclosure at issue here consisted of other, state-mandated disclosure information, which furthered rather than undermined the FCRA’s purpose. But Syed’s holding and statutory analysis, said the court, were not limited to liability waivers. Rather, Syed considered the standalone requirement with regard to any surplusage. Moreover, Syed, the court explained, grounded its analysis of the liability waiver in its statutory analysis of the word “solely,” noting that the FCRA should not be read to have implied exceptions, especially when the exception – in that case, a liability waiver – was contrary to FCRA’s purpose.

No implied exception. Noting that Syed also cautioned “against finding additional, implied exceptions” simply because Congress had created one express exception, the court declined the employer’s invitation to create an implied exception here. Thus, because the employer’s disclosure form did not consist solely of the FCRA disclosure, it did not satisfy the FCRA’s standalone document requirement.

Did not comport with FCRA’s purpose. Nor could the employer explain how the surplusage language in its disclosure form comported with a the FCRA’s purpose, said the court, observing that its disclosure referred not only to rights under the FCRA and the ICRAA applicable to the employee but also to rights under state laws inapplicable to her and to extraneous documents that were not part of the FCRA-mandated disclosure. And while the employer cited to Noori v. Vivint, Inc., a district court decision reasoning that the inclusion of information “closely related” to the FCRA’s disclosure requirements does not violate the standalone document requirement, Syed foreclosed that approach. Therefore, said the court, the district court also erred in concluding that the disclosure form satisfied the FCRA’s standalone document requirement.

Not clear … Further, the form not only contained language a reasonable person would not understand, the language would confuse a reasonable reader because it combined federal and state disclosures. Thus, the district court erred in holding that the disclosure form was clear.

… but conspicuous. The form, however, met the conspicuous requirement, said the court, noting that the employer capitalized, bolded, and underlined the headings for each section of the disclosure and labeled the form so an applicant could see what she was signing. Although the font was inadvisably small, it was legible and all relevant information appeared on the front of the page. But because it was not both clear and conspicuous, the district court erred in granting summary judgment as to the FCRA and ICRRAA’s clear and conspicuous requirement.

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