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Ninth Circuit Strictly Construes FCRA Disclosure Stand Alone Requirement

Published by and on March 25, 2019

Ninth Circuit holds that including mandatory state law disclosures with the FCRA disclosure violates the FCRA standalone disclosure requirement.

In Gilberg v. California Check Cashing Stores, LLC, the U.S. Court of Appeals for the Ninth Circuit recently held that a prospective employer violates the Fair Credit Reporting Act’s (“FCRA”) standalone disclosure requirement by including extraneous information relating to state disclosure requirements in the same disclosure. The Ninth Circuit’s ruling is a strict reading of the FCRA’s “standalone document” requirement.

Under the FCRA, employers seeking consumer reports and background checks regarding job applicant or current employee must provide a “clear and conspicuous disclosure” to the applicant or employee “in a document that consists solely of the disclosure” before procuring the consumer report for employment purposes. 15 U.S.C. § 1681b. Following the written disclosure, the applicant must provide written authorization for the prospective employer to obtain the consumer reports for employment purposes. Id.

In Gilberg, the plaintiff alleged that California Check Cashing Stores violated both the FCRA and California law by providing applicants and employees a disclosure form that included state-specific disclosures in addition to the FCRA disclosure. The California specific disclosures in question were consistent with the purposes of the FCRA. In the U.S. District Court for the Eastern District of California, California Check Cashing Stores moved for summary judgment on all claims, and the district court entered summary judgment against the plaintiff, concluding that the FCRA disclosures in question were compliant under both the FCRA and California law.

On appeal, the Ninth Circuit conceded that California Check Cashing Stores’ disclosure form was consistent with the congressional purpose of the FCRA, however, the purpose did not override the Act’s plain meaning. The Court further explained that that the ordinary meaning of “solely” is “alone; singly” or “entirely; exclusively.” The Court concluded that because the disclosure form did not consist solely of the FCRA disclosure, it did not satisfy the FCRA standalone document requirement. The Court similarly concluded that the disclosure form equally violated the California law, which also requires that such a disclosure must be made as a standalone document.

Welter Insight

Employers in the Ninth Circuit (particularly California and Washington employers) should review current FCRA and state disclosure forms for compliance under the Gilberg opinion, and employers in other areas of the country should evaluate whether strict compliance with the standalone requirement makes sense elsewhere. Although strict compliance may create additional paperwork, providing separate state and FCRA disclosures will reduce risk of potential individual or class litigation.

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