A recent opinion by the Ninth Circuit Court of Appeals in Gilberg v. California Check Cashing Stores, LLC, 2019 WL 347027, is the first decision from a federal appellate court in the nation on the precise question of whether a disclosure form provided under the federal Fair Credit Reporting Act (“FCRA”) may also contain state-related disclosures. Prior to January 29, 2019, this was an open question among federal appeals courts. Now – for those states located in the Ninth Circuiti – the issue has been decided: a disclosure being provided under FCRA must not contain any state‑related disclosures. Otherwise, the Ninth Circuit believes the federal disclosure form is not a standalone document and not “clear.” Since other federal appellate courts may follow suit, a prudent employer will want to double-check its consent form to confirm the disclosure is standalone.
As a reminder, under FCRA, a consent form consists of two items: a disclosure and an authorization. A disclosure is a simple statement that notifies the applicant that you are about to run a background check. Specifically, you are telling the applicant that you may obtain a “consumer report” for “employment purposes.” The authorization is a document to be signed by the applicant authorizing you to run the background check. Although FCRA permits an employer to combine a disclosure with an authorization, it is now a best practice to split the consent into two documents at the very least – a disclosure and an authorization. And now, in light of Gilberg, there should be no reference in the disclosure to state-law rights. Those state-law disclosures should be on separate documents.
Over the last few years, many employers have already adopted a more conservative approach when it comes to their consent forms, and they have separated their disclosure from everything else. Although it wise to double-check with their legal counsel, these employers may find their consent form already complies with the expectations of the Gilberg court.
Some employers, however, may still be using “legacy” consent forms, like the one at issue in Gilberg. Gilberg actually dealt with a consent form used in 2014, just as the law was starting to change on this subject. The trial court determined in 2017 that the consent form was legal under FCRA, but nearly two years later, the Ninth Circuit decided otherwise, reversing the trial court. That being said, if you are an employer using a legacy – or old – consent form, please examine it to determine whether the disclosure is separate and free-standing, and contains no references to state law disclosures.
iThe states making up the 9th Circuit include Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington.
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