An FCRA Win for Employers in California

May 6, 2019

 

FCRA

April 15, 2019 – a California Court of Appeals affirmed summary judgment for the employer in an action alleging class-wide violations of the hyper-technical Fair Credit Reporting Act (FCRA)[1]. Following the Ninth Circuit’s pro-employee opinion in Gilberg v. California Check Cashing Stores, the court’s opinion is heartily welcomed by employers in California[2].


The plaintiffs’ class-action lawsuit alleged two FCRA violations against the employer: (1) that its background check disclosures to job applicants were not contained in a “standalone” document; and (2) that it rejected certain applicants based on information in their consumer reports without first providing the requisite pre-adverse action notice. The trial court granted summary judgment for the employer on both claims and concluded that any alleged violation of the FCRA was not “willful.” The plaintiffs appealed the trial court’s ruling, but the Court of Appeals affirmed the trial court’s judgment.

 

The Court of Appeals held that the employer’s disclosure did not constitute a willful violation of the standalone disclosure requirement. The plaintiffs argued that the FCRA permits only a “simple 10-word disclosure”; however, the Court rejected this argument because no authoritative guidance by the Ninth Circuit, the Federal Trade Commission, or the trial courts existed at the time of the alleged violations.

 

The court distinguished the Ninth Circuit’s opinions in Syed v. M-I[3] and Gilberg because both were decided after the employer presented the disclosures to the plaintiffs. Additionally, neither case considered alleged “extraneous” information similar to that in the employer’s disclosure forms. Thus, no authorities had existed to warn the employer away from using its forms and the employer’s alleged violations could not be willful as a matter of law.

 

The plaintiffs argued that instead of providing the required pre-adverse action notice to potentially disqualified job applicants, the letter issued by the background check company for the employer prematurely communicated a final decision (i.e., an adverse action) by the employer. The Court of Appeals disagreed. The court opined that the employer took a reasonable position in its pre-adverse action letters – “[t]he conditional nature of the decision and the time provided before any final action would be taken tend to support that delivery of the [background check company] letter did not constitute an adverse action” pointing to the conditional nature of the letter and the time provided before any final action in fact would be taken. It noted that an employer can fully intend to carry out the adverse action absent a dispute by the consumer.

 

Employers may easily violate the technicalities of the law, so it may be vital for employers to review their obligations under the FCRA, state, and local laws and to fortify policies to ensure compliance in this area.

 

[1] Culberson v. Walt Disney Parks & Resorts, No. B289488, 2019 Cal. App. Unpub. LEXIS 2606 (Apr. 15, 2019)

[2] Gilberg v. Cal. Check Cashing Stores, Ltd. Liab. Co., 913 F.3d 1169 (9th Cir. 2019)

[3] Syed v. M-I, Ltd. Liab. Co., 853 F.3d 492 (9th Cir. 2017)

 

 

This information has been prepared by Validity Screening Solutions for informational purposes only and is not legal advice. The content is intended for general information purposes only, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have.

Topics: Background Checks, Compliance



Jessica L. Troncoso, J.D.

Written by Jessica L. Troncoso, J.D.

Jessica focuses on Validity’s knowledge base of all laws, statutes, and enforcement actions regulating the employment screening industry. Jessica began in the Quality Assurance Department of Validity in 2012 and later worked remotely with the Research Department while attending law school. Jessica worked as a Judicial Extern for the Honorable Brian C. Wimes of the United States District Court for the Western District of Missouri and the Honorable Peggy Stevens McGraw of the 16th Circuit Court of Jackson County, Missouri.