Court Rules in Favor of Employer in Case Involving Alleged FCRA Violations

The California Court of Appeal found in favor of the employer, stating that the plaintiff failed to prove he had suffered any actual harm as a result of alleged FCRA violations.

Plaintiff Ernesto Limon received a set of disclosure forms used by convenience store chain, Circle K Stores, in their hiring process. Limon subsequently authorized Circle K to perform a background check and was hired. After Limon's employment ended, he sued the employer in federal court for allegedly violating the Fair Credit Reporting Act (FCRA), claiming the disclosure he was provided was not "clear and conspicuous."

The FCRA requires employers to provide a stand-alone disclosure that is not combined with other documents nor one that contains extraneous information. However, it also provides that an individual must show concrete proof of harm or injury.

In this case, the court did not focus on whether the forms were in violation of the FCRA but rather whether Limon had suffered any actual harm or injury. Ultimately, the court determined that the plaintiff had not met that burden of proof. This ruling was a first in California; state courts had historically permitted claims like these to proceed based on statutory violations alone, regardless of whether the worker demonstrated concrete harm or injury.

Limon re-filed his claims in state court. The California trial court also dismissed the case on similar grounds, noting that "an informational injury that causes no adverse effect is insufficient to confer standing upon a private litigant to sue" under California law. The plaintiff's petition for review of the decision was also rejected by the California Supreme Court.

Employers are encouraged to review background check disclosure and authorization forms in order to ensure compliance with FCRA regulations. Additionally, it is important for employers to keep in mind that background check laws vary significantly from state to state, and many involve more than what is required under FCRA.

Posted: February 16, 2023

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This document and/or presentation is provided as a service to our customers. Its contents are designed solely for informational purposes, and should not be inferred or understood as legal advice or binding case law, nor shared with any third parties. Persons in need of legal assistance should seek the advice of competent legal counsel. Although care has been taken in preparation of these materials, we cannot guarantee the accuracy, currency or completeness of the information contained within it. Anyone using this information does so at his or her own risk.

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