The Fair Credit and Reporting Act’s (“FCRA”) disclosure requirements of employers who conduct background searches on potential employees has generated a fair amount of consternation and confusion among some employers and–of more consequence–exposed them to liability for their failure to comply with these requirements. The FTC, in a blog post on April 28, 2017, issued much needed guidance.
At the core, these background reports are considered “consumer reports” under the FCRA, and the statute requires employers to make certain disclosures to prospective employees and obtain their authorization. Without clear guidance on the parameters of these requirements, however, some employers have understandably set loose their legal teams to set up forms they believe will comply with the FCRA, in as broad a manner as possible. The results are a mélange of hypertechnical disclaimers, waivers, releases of liability, all lumped into one or more documents, and written in dreadful legalese that is all but comprehensible to an average job applicant. Consequently, these meticulous and overinclusive disclosures are not considered effective enough to comply with the FCRA’s “clear and conspicuous” disclosure requirement. In many cases, these noncompliant disclosures and authorizations have exposed the employers to costly lawsuits under the FCRA.
The FTC reiterated that it is acceptable to put the disclosure and authorization into one document as long as they use “clear wording” sufficient to comply with the FCRA’s “clear and conspicuous” requirement. This means, the FTC stated, that “complicated legal jargon” and “extra acknowledgements or waivers” are out–these include any releases from liability, any certification by the prospective employee that the “job application is accurate,” any acknowledgement by the prospective employee that “hiring decisions are based on legitimate non-discriminatory reasons,” and “overly broad authorizations” permitting the release of information the FCRA prohibits.
The takeaway from the FTC blog post is that employers should resist the urge to “cover all bases” by overcomplicating these documents. In closing, the FTC could not have summed it up more succinctly than the final sentences of its blog post:
Just include a simple, easy-to-understand notification that you will obtain a background screening report, perhaps with a simple explanation of what information will be included in the report. The request for the prospective employee’s authorization should be in plain language, too.
That’s it. Nothing else is required – and nothing else is permitted by the FCRA.
Keep it simple. It’s not just a good idea. It’s the law.
If you have reason to believe that an employer or potential employer has engaged in unlawful conduct in connection with employment applications or actions based on your criminal history, you may be entitled to legal compensation under the law. Please contact us at 310.789.2145 for a free consultation.