We often report on case law that has the effect of placing more burdens on employers – so we are pleased to report on good news for a change. A recent class-action case in California’s Central District involving an allegation that the employer’s web-based application process violated the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. (FCRA) was recently decided in favor of the employer. It is an important decision because of the large number of companies that would have been subject to the same allegations if the case had been decided against the employer.
The application process for the employer (a bank) involves two separate background checks for different kinds of information. The first step is called the “Applicant Screening Investigation.” To begin this process, applicants are referred to a link to an on-line form titled, “Request to Initiate Authorization for Investigation.” Applicants must click a box that provides, “YES, I consent to this investigation and authorize [the employer] to procure a report on my background according to the terms below.” When it is clicked, the form shows a date/time stamp and the applicant proceeds on to enter information about prior addresses, education and employment.
The relevant language of the Request to Initiate Authorization for Investigation is as follows:
In connection with my employment or application for employment with [employer,] I authorize [employer] to request and obtain a consumer report that may contain information about my prior employment... prepared by [consumer reporting agency,] a consumer reporting agency. I understand that [consumer reporting agency] may utilize and report information from my former employers. I request, authorize and consent to the release and disclosure of any and all such information to [employer] by [consumer reporting agency].
If an applicant passes this first background check and is offered and accepts employment, he or she is then directed to a web-based platform to create an account and enter basic personal information. This stage is called the Criminal Background Check. There are two relevant forms to be completed in this stage. The first form is called, “Consent Form Standard Package.” The Consent Form is a five-page document that provides the applicant with an overview of the employer’s employment policies. The applicant must enter his or her name and date and click “continue” to electronically sign it. The Consent Form then generates the applicant’s electronic signature and date stamp. The second form is called, “Electronic Authorization Form for Consumer Reports.” This Authorization is an electronic one-page document that discloses to the applicant that a consumer report may be obtained for a criminal background check and authorizes that consumer report. The applicant electronically signs the form and a date/time stamp is generated on the form.
The relevant language of this document, entitled “Electronic Authorization for Consumer Reports,” is as follows:
In connection with your application for employment... understand that consumer reports... may be requested or made on you including consumer credit, criminal records, driving record, education, prior employer verification, workers compensation and other others... By electronically signing below... [y]ou hereby authorize and request, without reservation, any present or former employer, school, police department, financial institution, division of motor vehicles, consumer reporting agencies, or other persons or agencies having knowledge about you to furnish [consumer reporting agency] in any all background information in their possession regarding you, in order that your employment qualifications may be evaluated.
The plaintiff’s attorneys alleged that the employer’s online application process violated § 1681b(b)(2)(A) of the FCRA because the disclosure and authorization forms contained extraneous information, so the disclosure was not a stand-alone document. The allegation was that because the Authorization was “sandwiched” in between over 15 pages of other forms and signed in the same process, the employer violated the FCRA’s requirement that the disclosure be in a document consisting solely of the disclosure. In other words, the disclosure was not a stand-alone document because it was presented in a job application process. Additionally, the plaintiff’s lawyers pointed to other “extraneous information” on the presentation of the form ― apparently, the employer’s electronic tool to schedule fingerprinting was presented side-by-side with the Authorization.
The FCRA requires any person obtaining a consumer report for employment purposes to (i) disclose to the applicant in “a clear and conspicuous disclosure” that a consumer report may be obtained for employment purposes in a document that consists “solely of the disclosure,” and (ii) obtain the consumer’s written authorization before obtaining the consumer report.
The court ruled that the FCRA does not prohibit employers from providing the disclosure as one screen of the employer’s multi-screen application process. The court also ruled that both forms are “clear and conspicuous” because they disclose that a consumer report may be obtained for employment purposes using language that a lay person would understand. Finally, the court noted that the amount of text was minimal with headings in boldface, capital font using a larger typeface than the surrounding text so presenting the form side-by-side with the fingerprint scheduling tool was not distracting. The court dismissed the plaintiffs’ case.
This is the first case of its kind where an employer’s electronic application process was challenged based on the fact that it consisted of multiple documents and numerous pages, allegedly violating the FCRA’s requirement that the disclosure be a stand-alone document. The court endorsed an application process where the disclosure is on a stand-alone screen in the context of an employer’s website where other links on the page were not distracting.
Employers must continue to be diligent in their efforts to comply with the FCRA, including their online application processes.
- The disclosure should be on a screen by itself, separate from other pages of information.
- The disclosure and authorization should be clear ― in language that a layperson can understand so that they do not cause confusion or uncertainty for the applicant.
- The amount of text should be minimal.
- When the disclosure is on a screen with extraneous information (links to other parts of the application process, a footer of general information links, and a header of general site navigation), the documents should have headings in boldface and capital font and should use a larger typeface than the surrounding text.
- Each on-line document should show a date/time stamp when it is signed by the applicant. This enhances an employer’s argument that each document is a stand-alone document.
For more details on the FCRA, EEOC Guidance, various state laws and much more, please visit backgroundchecks.com’s compliance resources and compliance updates archives.