Will the Wrong Background Check Disclosure Form Cost You? 21 Apr 2017

All employers have a standard set of forms used for consideration of employment applicants, including often a disclosure that the employer will run a consumer or criminal history report as regulated by the Fair Credit Reporting Act (FCRA).

Recently a Federal District Court in Minnesota found that receipt of a background check disclosure that includes the proper content, but is laid out in an improper form, is not enough to confer standing for a plaintiff to sue an employer under the FCRA.

What the Case Was About

In a class action lawsuit, a nursing home/assisted living centers operation had obtained a background check on named plaintiff Maxine Fields, who was then employed with them for 14 months after they found no criminal history and she passed other employment checks.

Ultimately, Fields sued the defendants under the FCRA. In her lawsuit, she claimed that their background check authorization document violated the FCRA because, among other things, it wasn’t clearly and conspicuously stated, on a separate form, which type of report was going to be procured.

The FCRA requires that if a person intends to run a consumer report (including a criminal background check) for employment purposes, that person must:

1. provide a clear and conspicuous document containing solely the disclosure that a consumer report may be obtained for employment purposes; and
2. obtain written authorization for the procurement of the report by that person.

Under the FCRA, a plaintiff can recover statutory damages even if she has suffered no actual damages for willful violations of the law.

It was this broadly constructed damages clause that may have attracted an opportunistic plaintiff attorney to build a class action suit from such a seemingly trivial violation, as they considered the hundreds of employees of the corporation who had been given the same disclosure form over the years.

The lawsuit sought relief for all plaintiffs in the class who had suffered this same “informational injury” of being given an aggregated form with their job applications.

Judge: No Real Injury Occurred

It’s not hard to see why the judge’s sympathies may have been with the employer. The Assisted Care industry already is subject to such a tangle of federal and state regulations that a minor oversight in an application package would have seemed so de minimus that he couldn’t bring himself to punish them. The required language was there, and her signature was at the bottom of the page even if the form contained some extraneous information. In the end, he granted the defendant’s motion to dismiss.

“Informational Injury” Cases Hard to Prove

As a legal cause of action, suing for an “informational injury” has been tried before without much success, mostly under consumer privacy laws.

In one Appellate case, the plaintiffs sued for inadequate information on company home pages related to privacy protections under California’s “Shine the Light” law but were unable to show standing because they hadn’t actually requested anything from the company about its use of their private information. Sometimes plaintiffs can be so dumb when they’re trying to be clever.

Best Practices Suggestion: Get Both Form and Substance Right, From the Start

While the Fields case is a win for employers struggling to do the right thing, other federal jurisdictions have often ruled the opposite way on disclosure issues related to background checks. It never pays to be sanguine even when a ruling seems favorable.

Employers should still be paying attention to their disclosure forms for background checks, and ideally have them reviewed by an attorney who specializes in the FCRA.

Clients of TrustedEmployees are furnished with fully FCRA-compliant documentation, so if you use our services or that of another reputable background check firm, you’re on safer ground altogether.