Three Tips to Reduce Legal Exposure Around Disclosures and Authorizations

September 14, 2019
Checkr Editor

In the evolving landscape of background check regulatory compliance, one of the hot-button issues continues to be disclosure and authorization forms for background checks.

According to the FCRA, disclosures for employment-related background checks must be “clear and conspicuous,” “in writing,” and “in a document that consists solely of the disclosure.” Not adhering to these requirements presents significant legal risk.

In a recent case, an employer was able to protect itself from legal liability by adhering to the disclosure and authorization requirements in the FCRA. Oregon-based Fred Meyer, a supermarket chain, was named in a putative class action after denying employment to a prospective candidate.

The plaintiff, who was a Fred Meyer job applicant, was presented with disclosure and authorization forms containing information related to both general and investigative consumer reports. An investigative consumer report is one that contains information on a “consumer’s character, general reputation, personal characteristics, or mode of living” obtained through “personal interviews.” The candidate alleged that the disclosure violated the FCRA’s “sole disclosure” requirement, by mixing the general and investigative consumer report language.

However, the case was dismissed, as Fred Meyer technically met the requirements for disclosure and authorization under the FCRA.

The Fred Meyer case is a good reminder to review your disclosure and authorization forms to protect yourself from unnecessary exposure to class actions using the following tips:

Make sure that your background check disclosure is “standalone,” meaning that it includes no other extraneous information such as an indemnification clause. Fred Meyer managed to avoid the class action in no small part because the disclosure was in its own standalone document with no extraneous information.

Place your disclosure and authorization forms in separate documents. Separating these two documents can help avoid allegations that your disclosure isn’t standalone, or isn’t clear and conspicuous.

Distinguish between general and investigative consumer reports. If your background report will include information about the consumer’s character, obtained through personal interviews, then you should call that out clearly within your disclosure.

Checkr’s guidance should not be construed as legal advice, guidance, or counsel. Companies should consult their own legal counsel about their compliance responsibilities under the FCRA, Title VII, and applicable state laws. Checkr expressly disclaims any warranties or responsibility or damages associated with or arising out of information provided.

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