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Ninth Circuit Ruling Mandates Hyper-Technical Compliance for Background Check Disclosure Forms

SUMMARY: The Ninth Circuit Court of Appeals recently ruled in favor of a California employee suing her former employer for violations of the laws governing background check disclosure forms.  Federal and California law require stand-alone background check disclosure forms.  Employers who run credit checks, criminal background checks, or other consumer reports on applicants or employees need to consider all applicable federal, state, and local laws.  

RULE: Over the last few years, litigation has increased over hyper-technical non-compliance with the Federal Fair Credit Reporting Act (“FCRA”) and other background check laws.  The Ninth Circuit Court of Appeals ruled in favor of hyper-technical compliance with the FCRA and the California Investigative Consumer Reporting Agencies Act (“CICRAA”).  Specifically, the Court held that under the FCRA and the CICRAA, an employer may not combine a background check disclosure with any extraneous information, including other state-mandated disclosures.  Disclosure forms may contain only the information mandated by law.  Employers must provide additional information separately.


TAKEAWAYS:   Although other federal Courts of Appeal have yet to comment on this issue, we recommend employers in all states who are using a third-party background check company, or using forms provided prior to this newsletter, review their background check forms with their legal counsel to ensure the forms comply with Federal, state, and local law.  Employers may wish to ensure they use arbitration agreements with class action waivers, because plaintiffs have filed many of these background check claims as class actions.

Gilberg v. Cal. Check Cashing Stores, LLC
Please contact Elaine Chang for more information.