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Financial Services Law Insights and Observations

9th Circuit: Providing disclosure with employment documents does not violate FCRA

Courts Appellate Ninth Circuit FCRA Disclosures

Courts

On April 24, the U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s ruling that an employer that obtained a consumer report for employment purposes did not violate the FCRA when it provided disclosure simultaneously with other documents and failed to use a standalone document for the FCRA authorization. The plaintiff, a former employee, alleged that during the hiring process, applicants were presented with employment documents and were required to sign two forms related to consumer reports: (i) a separate “disclosure” form that informed applicants that the employer could obtain reports pertaining to their employment record, drug tests, and driving record; and (ii) an “authorization” form appearing at the end of the application, which authorized the employer or its agent or subsidiary to investigate the applicant’s previous employment record. The plaintiff’s suit alleged that the forms violated the FCRA’s standalone disclosure requirement because the defendant presented the forms at the same time as other application materials and failed to place the authorization on a standalone document. The district court granted summary judgment to the defendant.

On appeal, the 9th Circuit rejected the plaintiff’s argument, concluding that there is nothing that prohibits an employer from “providing a standalone FCRA disclosure contemporaneously with other employment documents.” While the 9th Circuit acknowledged that the FCRA requires a disclosure form to contain nothing more than the disclosure itself, “no authority suggests that a disclosure must be distinct in time, as well.” With respect to the authorization, the appellate court rejected the argument that it violated the FCRA because “the authorization subsection of FCRA lacks the disclosure subsection’s standalone document requirement” and only requires that the authorization be in writing.