Before an employer (or potential employer) can obtain a consumer report for employment purposes, it must obtain written consent from the consumer to do so.1 Here are a few questions to consider when securing consent forms from the consumer.
What constitutes valid consent from a consumer?
Put simply, valid consent required by the Fair Credit Reporting Act consists of:
(1) a written disclosure to the consumer and
(2) written authorization by the consumer.2
FCRA disclosures must be provided to consumer in writing and must inform the consumer that a consumer report about her may be obtained for employment purposes.3 It must also be clear, conspicuous, and in a document that consists solely of the disclosure.4 Again, it is essential that the disclosure is in a stand-alone document, as extraneous information could potentially confuse or mislead the consumer. In the past, employers frequently combined FCRA disclosures with similar state disclosures. However, the 9th Circuit Court of Appeals issued an opinion at the beginning of the year effectively prohibiting this practice.5 In a nutshell, the 9th Circuit found that combining the FCRA & state disclosures in this fashion would be confusing to some consumers, and therefore is not permissible under the FCRA.6
How long are consent forms valid?
Employers frequently rely on previously executed consent forms to conduct periodic rescreens on their employees. This is permissible under the FCRA as long as the initially executed consent form was evergreen in nature. Evergreen consent forms typically consist of language such as “I authorize [the employer] to obtain a consumer report about me now and at any time during my employment.” Employers should make sure that any old forms they recycle to conduct rescreens were compliant the first time around. For example, those using old forms that we now know were invalid back in 2014 due to having combined FCRA and state disclosures don’t want to be caught using the same invalid forms again in 2019. Two wrongs don’t make a right, as they say.
What happens when an applicant or employee refuses to provide consent?
Occasionally, consumers may refuse to provide employers with executed consent forms. The question quickly becomes for the employer – what is the consumer hiding? Naturally, employers may not want to proceed with hiring a consumer that has something negative to hide on his background check, but they are still prohibited from requesting a report without obtaining his consent. Employers who find themselves in this situation may wish to note that the FCRA does not prohibit employers from taking adverse action against applicants or employees who refuse to provide consent to the employer (however, it doesn’t specifically authorize employers to do so either).7 Employers should consider their options on how to handle abstaining consumers by consulting their own internal employment policies as well as with their legal counsel.
Are there any exceptions to the requirement for employers to obtain the consumer’s consent?
The FCRA excludes certain types of reports from the definition of “consumer reports.” For example, reports obtained by employers for the sole purpose of investigating suspected employee workplace misconduct do not fall within the scope of the term.8 As these are not technically “consumer reports” obtained for “employment purposes,” employers do not need to obtain consent from consumers before procuring this type of report. Employers should carefully consult the FCRA’s specific procedures and limitations applicable to this exception before requesting reports without consent to do so.
Is there anything else employers need to know about consent forms?
While obtaining consumer consent pursuant to the FCRA is relatively black and white, there are several pitfalls and common misconceptions surrounding the process. Employers should stay up to date on changing consumer protection laws (such as the FCRA and related state laws) and consistently consult with legal counsel to avoid inadvertently making a fatal mistake in the process. ESS offers its clients exemplar forms that we have created in our best efforts to assist our clients in obtaining valid consent to perform background checks, but we always stress the importance of seeking legal counsel regarding the consent form needed to fit each client’s unique employment and legal needs.
This publication is provided only for educational purposes; it should not be relied upon as legal advice, and it should not be used, in whole or in part, as a basis for establishing employment practices or policies, nor should it be used for resolving disputes or managing risk. Every reader’s circumstances are unique and legal advice should be obtained only from a lawyer with whom the reader has established an attorney-client relationship. Copyright 2019 ©Employment Screening Services, Inc. All material contained within this publication is protected by copyright law and may not be reproduced without the express written consent of ESS.
1 A consumer is the subject of a consumer report (i.e., an applicant or employee).
2 15 U.S.C. § 1681b(b)(2).
3 An additional disclosure is required when employers intend to obtain investigative consumer reports.
4 Important note: The FCRA does allow for the disclosure to be combined with the authorization. However, many employers get carried away with this exception and end up adding too much information to the page, such as state notices or information inquiries. ESS recommends taking the safe approach and leave the disclosure on its own, separate page.
5 Gilberg v. California Check Cashing Stores, LLC, 913 F.3d 1169 (9th Cir. 2019).
6 See our past blog article about Gilberg at https://www.es2.com/significant-change-to-background-check-consents/.
7 Related state laws may differ.
8 15 U.S.C. § 1681a(y).