FCRA Disclosure May Be Part of Application and Include Authorization

​While the Fair Credit Reporting Act (FCRA) requires that a disclosure of rights be provided in a separate document, it may include lines for signature and date, and be part of an application packet, the 9th U.S. Circuit Court of Appeals ruled.

The FCRA bars an employer from obtaining a credit report or criminal background check from a third party for an employment decision unless the employer complies with the FCRA's terms. Among other things, these terms require that, prior to running a background check, the employer provide a clear and conspicuous disclosure in writing in a document that consists solely of the disclosure, and that the applicant or the employee provide a written authorization to allow the background check.

The 9th Circuit has ruled that the separate-disclosure requirement means that an employer cannot include a liability waiver as part of an FCRA disclosure form. Doing so would prevent the disclosure form from being a standalone document.

Based on this ruling, a truck driver filed a federal class-action lawsuit in Pasadena, Calif., to challenge the FCRA disclosure form he signed. He sued his former employer, Hansen & Adkins Auto Transport Inc., a vehicle transportation business employing more than 1,100 big rig truckers, mechanics, dispatchers and other support staff.

The plaintiff's FCRA claims stemmed from Hansen & Adkins's hiring process, which involved a commercial driver employment application. This multiform, multipage application included notices and authorizations permitting Hansen & Adkins to retrieve safety history and driving records and conduct drug and background checks.

Job applicants signed two documents related to consumer reports. One, the disclosure, appeared on a separate sheet of paper and informed applicants "that reports verifying your previous employment, previous drug and alcohol test results, and your driving record may be obtained on you for employment purposes."

The other, the authorization, indicated that an applicant's signature authorized Hansen & Adkins "or their subsidiaries or agents to investigate my previous record of employment." The authorization appeared at the end of the application, and included other notices, waivers and agreements unrelated to acquiring the consumer report.

The plaintiff claimed that Hansen & Adkins violated the FCRA because its disclosure of rights form included lines for him to sign and date to authorize his background check. He also claimed that the disclosure was not a separate document because it was included with other forms in the application, which were provided to him at the same time as the FCRA disclosure.

Hansen & Adkins moved for summary judgment, which the district court granted. The plaintiff appealed the decision to the 9th Circuit.

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On appeal, the 9th Circuit held that the plaintiff's objection to Hansen & Adkins' inclusion of the disclosure as part of the application stretched the FCRA's requirements beyond the limits of law and common sense. While the FCRA requires that a disclosure form contain nothing more than the disclosure itself, it does not require that the employer provide the disclosure form at a separate time from other documents.

Moreover, the inclusion of signature and date lines with the disclosure did not render it part of another document. The 9th Circuit distinguished this addition from the inclusion of waiver of liability language that it found unlawful in its prior decision.

Finally, the 9th Circuit noted that the FCRA did not require that the authorization form be contained in a separate document, only that a written authorization be signed. The FCRA thus permitted the inclusion of the authorization as part of another document, such as the disclosure form.

The 9th Circuit upheld the district court's dismissal of the plaintiff's class-action lawsuit.

Luna v. Hansen & Adkins Auto Transport Inc., 9th Cir., No. 18-55804 (April 24, 2020).

Professional Pointer: The 9th Circuit has taken a strict interpretation of the separate-disclosure requirement of the FCRA, barring inclusion of any distinct material from the disclosure document. Nonetheless, even the 9th Circuit recognizes that inclusion of date and signature lines on the disclosure does not violate the FCRA and satisfies the written-authorization requirement.

Jeffrey Rhodes is an attorney with McInroy, Rigby & Rhodes LLP in Arlington, Va.