Active FCRA Judge Reaffirms Trend Against Employers in Class Action for Insufficient FCRA Disclosure

As we have previously reported, plaintiffs’ lawyers are pursuing employers in class actions seeking compensation for the employers’ alleged failure to provide a disclosure that complies with Fair Credit Reporting Act § 604(b)(2)(A). Specifically, in each of these suits, the plaintiffs allege that employers violate the FCRA because they did not provide the applicant with a stand-alone disclosure consisting solely of the disclosure before ordering a background check.

FCRA Section 604(b)(2)(A) requires any person obtaining a consumer report for employment purposes to first disclose to the applicant in “a clear and conspicuous disclosure . . . in a document that consists solely of the disclosure” that it may obtain a consumer report for employment purposes. In Milbourne, et al. v. JRK Residential America, LLC, another court reaffirmed the trend against employers who include liability waivers in their FCRA disclosures. On March 10, 2015, Senior Judge Robert E. Payne concluded that, in this statute, “solely” means “to the exclusion of all else.”Therefore, the employer’s inclusion of a liability waiver violated the FCRA. The judge seemed inclined to allow the question of whether the employer’s violation was “willful” to be decided by a jury. If the jury finds that the violation was willful, the jury would then award $100 to $1,000 in statutory damages per violation (or actual damages, if greater) plus punitive damages plus reasonable attorney's fees. Judge Payne, who sits on the bench in one of the most active jurisdictions for FCRA cases, has presided over dozens of Fair Credit Reporting Act matters and has an outsized influence on FCRA litigation.

In 2014, the courts saw dozens of similar new class actions filed alleging the same types of deficiencies in the employer-provided FCRA disclosure. The risk employers face is substantial and material. When an employer is faced with a lawsuit like this, the potential class size could be enormous, given that it would include every applicant to whom the employer had provided the improper disclosure in the previous two (or even five) years. Employers who have settled cases like this have paid up several hundred dollars per applicant. For example, in Singleton v. Dominos, the parties settled a class of 11,000 applicants for an average of $370.97 each.

What this update means for you:

  • To avoid expensive class actions, employers should review their FCRA disclosure documents today.
  • Your FCRA disclosure document (1) should not include any extraneous language, including liability waivers; (2) should not be in the same document or online screen as the general employment application; and (3) should be on a separate piece of paper from the authorization.
  • Don’t assume that your disclosure document must be OK because you have been using it for years.

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Michael Klazema

About Michael Klazema The author

Michael Klazema is the lead author and editor for Dallas-based with a focus on human resource and employment screening developments

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