Disclosure and Authorization Form Under the FCRA: It is Not a Release
Service : Compliance Services
Response & Analysis:
Given the uptick in FCRA-related litigation, now is a good time for employers to review and fortify their compliance practices when it comes to applicant screening. The form used to initiate the background screening process is the “Disclosure and Authorization” form required pursuant to Section 604(b)(2) of the Fair Credit Reporting Act (“FCRA”), often referred to as a “Release,” as in “release of information.” The form, however, should properly be referred to as the “Disclosure and Authorization” form because the intent is to inform or disclose to the applicant that, as part of the hiring process, an employer may obtain a consumer report for employment purposes and that the employer is seeking the applicant’s written authorization or consent to do the same.
(i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured…in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and
(ii) the consumer has authorized in writing…the procurement of the report by that person.”
The statute requires this disclosure in a completely standalone document, without any extraneous information. The Fair Trade Commission (or FTC) has made clear as have the courts that Section 604(b)(2) does allow the authorization to be part of this standalone document and therefore certain identifying information may also be included to initiate a background check (i.e. name, date of birth, SSN). Certain states impose additional obligations and require the inclusion of additional information in the notice – California, Minnesota and Oklahoma, for example, require “check the box” language that a consumer can initial to receive a copy of his or her report. Such additional information is permitted to be included in the “Disclosure and Authorization” form but not much else.
Despite this very direct and clear statutory language, many employers also include other information, including language asking the applicant to release the company and others from any liability and responsibility in connection with the consumer report. This “release of liability” has become quite commonplace but really problematic. Some employers also add company policy language, drug screen information and other miscellaneous items. Some add this “Disclosure and Authorization” as part of their employment application, although it has always been clear that this FCRA “Disclosure and Authorization” cannot be part of the boilerplate language at the end of a job application and it must be separate in a standalone document.
2012 Maryland District Court decision highlights the dangers of including anything extraneous in the “Disclosure and Authorization” form. In the case of Singleton v. Domino’s Pizza, LLC, Civil No. DKC 11-1823, 2012 WL 245965 (D. Md. 2012), the plaintiffs challenged the content of Domino’s “Disclosure and Authorization” form. Although it was separate from the employment application, Domino’s form contained language that sought to release Domino’s from any liability in connection with the background check – not uncommon. The plaintiffs argued that this additional release language violated the FCRA requirement that the document consist “solely” of the disclosure and authorization. In adopting a very narrow view of what can be included on the “Disclosure and Authorization” form, the court agreed with the plaintiffs and explained that “by containing a liability release…the form includes information that extends beyond the disclosure itself.” The court further held that, because the statute is so clear on its face, an employer’s interpretation that including more information on a form than “solely” the disclosure was objectively unreasonable and demonstrated a willful violation.
The Court here too applied a very narrow and literal interpretation of the “consists solely of the disclosure” language in the statute and agreed that this was a violation of the FCRA. Adding the “release of liability” language was extraneous information and so the Court found the form to be non-compliant. Like the court in the Domino’s case, the Court here also found that including the waiver or release of liability language was an “unreasonable interpretation” and “willful” so the company faced statutory liability under the FCRA of up to $1,000 per plaintiff, along with punitive damages and attorneys’ fees. The parties, however, settled the class action just after this decision was issued so the ruling will not be reviewed by the higher court.
Since the beginning of 2014, at least three more class action suits have been filed alleging that the employer in each case willfully violated the FCRA by obtaining consumer reports on the basis of legally invalid authorization forms that contained releases of liability. The trend appears to be heading in the direction of following the clear language of the FCRA and avoiding the use of the word “release” in any manner. While there is clearly a distinction between a “release of information” and a “release of liability,” the use of the word “release” for what should properly be referred to as the “Disclosure and Authorization” form should be avoided altogether. Given the uptick in FCRA class action litigation, it is critical that employers revisit their forms and remove any extraneous language.
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