Posts

Employers should have background check forms reviewed immediately, especially in Ninth Circuit

In a surprising decision, the Ninth Circuit has issued a ruling that an employer violates both federal and California state background check laws when it uses relatively common language.

The federal law that governs background checks is the Fair Credit Reporting Act (FCRA). Its California equivalent is its Investigative Consumer Reporting Agencies Act (ICRAA). Both require certain content be included in the paperwork that goes to and must be signed by the candidate. Both state that nothing else may be set forth in those forms. This is called the “standalone requirement.” In other words, the requirement is that the background check forms be standalone documents; they cannot be part of a job application or the like.

In this case, the forms stated the information required by FCRA and ICRAA. Then they added similar language for four other states, with headers setting off the state-specific language like “Minnesota and Oklahoma applicants or employees only. Check this box if ….” and “New York applicants or employees only. By signing below, you also acknowledge ….”

The Ninth Circuit held those additional state-specific disclosures violated FCRA and ICRAA because they had nothing to do with the particular individual being asked to fill out the form (an applicant for employment, in this case) who lived and was applying to work in California. The Ninth Circuit said that this seemingly clear language was nonetheless “extraneous” and “as likely to confuse as it is to inform.” Therefore the Ninth Circuit held it violated both FCRA and ICRAA’s standalone requirement. 

Source: Gilberg v. California Check Cashing Stores, LLC, case no. 17-16263 (9th Cir. 1/29/19).

Bureau of Consumer Financial Protection Issues Updated FCRA Model Disclosures

The Bureau of Consumer Financial Protection (Bureau) issued an interim final rule that updates its model disclosures under the Fair Credit Reporting Act (FCRA). The new FCRA forms advise individuals of their right to, now, request a free “national security freeze” under the Economic Growth, Regulatory Relief, and Consumer Protection Act.

The “national security freeze” restricts prospective lenders from obtaining access to a consumer’s credit report, which makes it harder for identity thieves to open accounts in the consumer’s name.

The Bureau has made the new forms available on its website, in a variety of languages.

Employers that run background checks should ensure that they — and their background checking companies — are using the new forms.
Source: www.consumerfinance.gov/about-us/newsroom/bureau-consumer-financial-protection-issues-updated-fcra-model-disclosures/

Employer’s investigation held reasonable under FCRA by Tenth Circuit

The FCRA (Fair Credit Reporting Act) is the federal law that governs background checks. Employers of DOT-covered drivers must run and participate in a background checking program.

In this case, the company had reported the plaintiff for an “Unsatisfactory Safety Record” because, while driving for the company, a speed monitoring device had reported him as driving at least 4 miles over the speed limit in a 7-day period, for which the company had issued him a “Serious Warning.” With that entry on his record, when the driver later applied to another company, his application was rejected because of that report. Accordingly he requested, pursuant to his FCRA rights, that the company re-investigate the matter and clear his record. The company reviewed its records and refused to clear the entry. The driver sued and demanded a jury trial.

The Tenth Circuit joined the First, Seventh and Ninth Circuits in holding that a jury trial is not automatically required to determine the reasonableness of every re-investigation. The Tenth Circuit then held that an investigation could be reasonable if the company did no more than “rely on its own records.” The company was not required to go back and review the original speed monitoring device’s logs. “(T)he scope of a reasonable investigation turns on the information about the dispute that the furnisher has received.”

(A)n investigation does not have to be exhaustive to be reasonable; (the company) may balance the costs and benefits of engaging in additional procedures.

The case was Maiteki v. Marten Transport Ltd., 828 F. 3d 1272 (10th Cir. 2016).