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Scherzer Wellness Warriors – Fundraising for the Arthritis Foundation

The Arthritis Foundation has accomplished so much over the years in critical research, legislative victories, and learning important things about the realities of living with arthritis. Together, we have made such monumental progress — and we must keep that momentum going.

Your generous support powers the scientific breakthroughs, legislative wins and life-improvement programs the Arthritis Foundation leads, bringing us closer to a cure every day. Please give your generous gift today!

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October 29th, 2021|Community Service|

REMINDER TO NYC EMPLOYERS: NEW REQUIREMENTS UNDER FAIR CHANCE ACT GO INTO EFFECT JULY 28, 2021

On January 10, 2021, the New York City Council passed an amendment (Local Law 4) to the city’s Fair Chance Act (FCA) which significantly expands protections for job applicants and employees. The amendment goes into effect July 28, 2021. Below are highlights of Local Law 4:

  • Expands scope of “criminal history” to include pending arrests and other criminal accusations.
    The FCA process must be used to determine if a pending arrest or other “criminal accusation” may be the basis to rescind a conditional job offer. Such rescission may only occur if, after considering the relevant fair chance factors “the employer determines that either (i) there is a direct relationship between the alleged wrongdoing that is the subject of the pending arrest or criminal accusation and the employment sought or held by the person; or (ii) the granting or continuation of the employment would involve an unreasonable risk to property or the safety or welfare of specific individuals or the general public.”
  • Adds new factors to the individual assessment for pending arrests or criminal charges, or convictions that occur during employment.
    Employers will have to consider the following factors, in lieu of the Article 23-A analysis:
  • The New York City policy “to overcome stigma toward and unnecessary exclusion of persons with criminal justice involvement in the areas of licensure and employment”;
  • the specific duties and responsibilities “necessarily related” to the job;
  • the bearing, if any, of the criminal offense or offenses for which the applicant or employee was convicted, or that are alleged in the case of pending arrests or criminal accusations, on the applicant’s or employee’s fitness or ability to perform one or more such duties or responsibilities;
  • whether the employee or applicant was 25 years of age or younger at the time the criminal offense(s) for which the person was convicted occurred, or that are alleged in the case of pending arrests or criminal accusations;
  • the seriousness of such offense(s);
  • the employer’s “legitimate interest” in “protecting property, and the safety and welfare of specific individuals or the general public”; and
  • any additional information produced by the applicant or employee, or produced on their behalf, regarding their rehabilitation or good conduct, including history of positive performance and conduct on the job or in the community, or any other evidence of good conduct.
  • Prohibits inquiries about specified criminal matters.
    At no time may an employer take an adverse action against an applicant or employee based on that person’s (i) violations; (ii) non-criminal offenses; (iii) non-pending arrests or criminal accusations; (iv) adjournments in contemplation of dismissal; (v) youthful offender adjudications; or (vi) sealed offenses, if disclosure of such matters would violate the New York State Human Rights Law.
  • Requires employers to solicit from the candidate information related to the FCA process.
    Currently, the FCA requires employers to only solicit evidence of rehabilitation and good conduct.
  • Expands the time for candidates to respond to the employer’s written assessment from three to five days.
  • Codifies guidance from the New York City Commission on Human Rights on revoking a conditional offer of employment.
    Employers may only revoke the conditional offer based on (i) the findings of a criminal background check following an individual assessment conducted pursuant to the FCA process, (ii) the results of a medical examination, consistent with the Americans with Disabilities Act; or (iii) other information obtained by the employer after making the conditional offer, if the employer could not be reasonably expected to have that information prior to making the offer and the employer would not have made the offer if it had possessed such information.
  • Requires production of evidence to the applicant or employee where the employer takes adverse action pursuant to an alleged misrepresentation by the applicant or employee.
    Und3r the existing FCA, an employer may take adverse action against candidates who intentionally misrepresent information to the employer. The Law will continue to allow an employer to take such action, but will require the employer to provide to the candidate the documents or other materials that support the employer’s claim of misrepresentation and permit the individual a “reasonable” amount of time to respond prior to taking the adverse action.
June 10th, 2021|Employment Decisions, Legislation|

2021 UPDATE OF FCRA LITIGATION AND THE EFFECT ON EMPLOYMENT BACKGROUND SCREENING

Fair Credit Reporting Act (FCRA) lawsuits continue to rise with the number of complaints filed in federal courts showing a +5.3% increase in 2020 over 2019[1]. This continues a trend for FCRA litigation as it has consistently shown year-over-year growth since 2010. An issue that garners much attention in FCRA litigation is whether an employer’s disclosure and authorization forms violate the FCRA. Two federal appellate decisions address this issue and provide important guidance for employers on how to draft FCRA disclosure and authorization forms.

FCRA Disclosure and Authorization Forms

Employers that want to obtain a background check report about a job applicant or current employee must comply with the FCRA and provide to the individual a standalone document with a clear and conspicuous disclosure of the employer’s intention to do so, and obtain the individual’s authorization. By way of background, the principal appellate opinion on disclosure and authorization forms is the Ninth Circuit’s Gilberg v. California Check Cashing Stores, LLC, No. No. 17-16263 (January 2019). The Gilberg opinion made clear that any extraneous information in an FCRA disclosure form violates the FCRA’s requirement that the disclosure must be “in a document that consists solely of the disclosure” (the standalone requirement). The employer in Gilberg was found to have violated the standalone requirement by:

  1. Combining the authorization and disclosure into one document; and
  2. Including several state-related disclosures in the form.

Two important cases from 2020 that further addressed the requirements and limitations for the content of an FCRA disclosure form were issued by the Ninth Circuit in Walker v. Fred Meyer, Inc., No. 18-35592 (March 20, 2020) and Luna v. Hansen & Adkins Transport, Inc., No. 18-55804, (April 24, 2020).

In Walker v. Fred Meyer, the court indicated that background check disclosures may contain some concise explanatory language, but there is a limit to what is explanatory and what is unlawfully extraneous. Among other allegations, the plaintiff in Walker claimed that the FCRA disclosure violated the standalone requirement because, in addition to mentioning consumer reports, it also mentioned investigative consumer reports (a type of consumer report). The Ninth Circuit rejected this claim and ruled that mentioning investigative background checks in the disclosure does not violate the FCRA’s standalone requirement because investigative consumer reports are a subcategory or specific type of consumer report and as long as the investigative background check disclosures are limited to (1) disclosing that such reports may be obtained for employment purposes and (2) providing a very brief description of what that means.

The Ninth Circuit reviewed the employer’s disclosure in Walker in detail, which consisted of five paragraphs, and held that the first three paragraphs did not violate the standalone requirement, but that the last two paragraphs did because they may pull the individual’s attention away from their privacy rights protected by the FCRA. Here are the offending paragraphs in their entirety:

“You may inspect GIS’s files about you (in person, by mail, or by phone) by providing identification to GIS. If you do, GIS will provide you help to understand the files, including communication with trained personnel and an explanation of any codes. Another person may accompany you by providing identification.”

“If GIS obtains any information by interview, you have the right to obtain a complete and accurate disclosure of the scope and nature of the investigation performed.”

The plaintiff in Walker also claimed that the language of the employer’s authorization form, which was in a separate document was confusing and underscored the confusing and distracting nature of disclosure form, thus violating the FCRA’s standalone requirement. The Ninth Circuit rejected this argument because it found that the authorization form is not relevant to the FCRA disclosure form’s standalone requirement where the authorization is not included in the disclosure and is in a separate authorization form.

In Luna v. Hansen, the plaintiff claimed that the FCRA’s physical standalone requirement for hard-copy forms was a temporal one, i.e., the disclosure form should be presented to the individual separate from all other employment-related forms. The plaintiff in Luna had received one packet containing all forms. The Ninth Circuit rejected this argument and held that as long as the background check disclosure itself is in a standalone form, it can be presented with and at the same time as other employment documents.

Key Takeaways

Given the steady uptick in FCRA litigation, it is advisable for employers to review their FCRA disclosure and authorization forms on at least a yearly basis, or whenever important appellate opinions are issued, to ensure compliance with the FCRA. The attached forms from the Gilberg and Walker opinions provide clear examples of what to avoid in FCRA disclosure forms. In general, the guidance provided in the above-referenced opinions indicate that:

  • background check disclosure forms may contain some concise explanatory language, but there is a limit to what is explanatory and what is unlawfully extraneous;
  • background check disclosure forms may be presented at the same time as other materials, including application materials, as long as the background check disclosures are on a separate form; and
  • language in a separate authorization form has no impact on the disclosure form’s compliance with the FCRA standalone requirement.

[1] WebRecon Stats for Dec 2020 and Year in Review

Disclaimer: This communication is for general informational purposes only and does not constitute legal advice. No recipient should act, or refrain from acting, based on any information provided here without advice from a qualified attorney licensed in the applicable jurisdiction.

March 23rd, 2021|Employment Decisions, Guidance, Judgment, Lawsuit|

Digital Spring Cleaning

Spring is traditionally a time when people do a deep cleaning of their homes. Have you thought about taking this one step further and doing a digital security deep clean? We recommend reviewing at least every quarter to minimize the risk of identity theft. Here are four steps to get you started to protect your personal data. 

  • Change your passwords. Your company probably automatically asks you to switch passwords every 4-6 weeks. But when is the last time you changed your passwords on your personal social media accounts, subscriptions, or places you shop? You should consider updating these passwords, too. In fact, old passwords can be easy ways for hackers to steal your identity. Delete old accounts you no longer use. You might be surprised to find that some of those are decades old with easily guessed passwords. When you choose your new passwords, do not repeat them across various accounts. You’re just making it easier to get hacked.
  • Review your social media accounts. Have you been cloned on Facebook, Instagram, or other social media platforms? Take a moment and search for yourself on these sites and see if you appear more than once. Don’t wait for your friends to send you a text saying, “I just got a friend request from you, but we’re already friends.” If you’ve been cloned, report it and change your passwords.
  • Avoid oversharing. Think twice before you overshare information or play a social media game that asks you to list personal information about yourself. These simple activities are ways that hackers gather your data. The latest high-risk trend is sharing a picture of your COVID vaccination record with your full name and date of birth clearly visible. Instead, consider sharing a photo of an “I got vaccinated” sticker. 
  • Have you been hacked? A cybersecurity FBI agent once told me, “It used to be a case of not if, but when you’ve been hacked. Now it’s a case of you’ve been hacked, and you either know it or don’t know it yet.” HaveIBeenPwned is one of several free sites where you can check if you’ve been caught up in a security breach.

These four steps will help you do a simple yet effective spring cleaning of your digital presence and protect your online identity. 

March 18th, 2021|Risk Management, Security, Social Media|

Pre-Employment Screening during the Pandemic

It is a standard practice for employers to run background checks on potential new hires. Such checks help employers protect their company by learning about the trustworthiness of the candidate through their financial, criminal, and driving records and education and employment verifications. But the pandemic has affected the operations of many institutions worldwide. From court closures to remote college campuses, it may be more difficult for the screening provider to check a criminal record or verify an educational background. Nonetheless, the possibility of delay should not cause employers to lower the standards of their screening policies.

The most important reason why an employer should not temporarily waive certain parts of a background check is because it may make it harder to justify its necessity in the future. For example, say a court is closed and is unable to provide information on candidates’ criminal history. Because of this, an employer who is anxious to add the new hire to the frontline chooses to waive the criminal check requirement. Well, when a court begins to provide legal information again and an employer decides to reinstate the criminal check requirement, the employer could face compliance issues.

Under current anti-discrimination laws, namely Title VII of the Civil Rights Act of 1964, employers must demonstrate that its hiring practices are “job related” and “consistent with business necessity.” But if an employer chooses to forgo the criminal checks during the pandemic and wishes to reinstate them later, they may be violating this law. Since the criminal check was once suspended, one could argue that the practice was not job related or that it was not a business necessity. Furthermore, streamlining the employment screening process by waiving certain aspects could lead an employer to overlook valuable insight into a candidate’s character. Therefore, while a shorter background check program during the pandemic could bring short-term benefits, it runs significant long-term risks.

So, what are your options?

We have outlined up two possible avenues available to employers during these times.

Hire now (but reserve the right to run future background checks)

If a company is in a position in which new hires are urgently needed, they may hire the candidates based on the information available to them at the time of the background check and reserve the right to conduct additional background checks post-hire, once information providers resume to normal operations. But if an employer takes this route, they must clearly communicate with both their background check provider and the new hire.

They should work with the background check provider to take note of those candidates whose checks are not yet completed so that the provider can easily revisit the report in the future. Employers should also make it clear in an employee’s offer letter that the offer of employment is contingent upon the successful completion of a background check that may occur at a later date.

Delay the hire

For employers who are required by law to complete background checks prior to a new hire’s start date, they may have to delay the worker’s start date. But whether a background check provider can access the required information for an employment screen depends on the location of the various sources of information, from the courthouses to the educational institutions.

All in all, although background checks may take longer during the pandemic, they are, especially now, critical to manage your risk. With the rising number of job seekers and the remote workforce, companies must do what they can to ensure that they are hiring qualified professionals who will be valuable additions to the company.

September 10th, 2020|Employment Decisions|

Client Alert: EU Court of Justice Invalidates the EU-US Privacy Shield

An important and unexpected ruling was handed down by the Court of Justice of the European Union (CJEU) on July 16, 2020, in Data Protection Commissioner v Facebook Ireland Ltd and Maximillian Schrems (“Schrems II”) that invalidates the EU-U.S. Privacy Shield (“Privacy Shield”) arrangement. Since 2016, the Privacy Shield provided U.S. companies with a mechanism to comply with the General Data Protection Regulation (GDPR) requirements when transferring personal data from the European Union to the U.S.

What this means

Now companies that subscribed to the Privacy Shield must find another GDPR-compliant solution for the transfer of data. The European Data Protection Board indicated in its July 23, 2020 FAQs that it will not be providing a grace period as the authorities had done for the EU-U.S. Safe Harbor (“Safe Harbor”) framework following the “Schrems I” decision.

Notably, the CJEU’s decision expressly stated that the standard contractual clauses (SCCs) previously promulgated by the European Commission (EC) are still a valid tool for data transfers from the EU to the United States. The SCCs are sets of contractual terms and conditions that the controller and the processor of the data both execute to comply with GDPR’s requirements.  However, the CJEU’s decision does not give blanket approval to the SCCs–the decision acknowledged that future challenges to SCCs are permissible by the local data enforcement agency for any EU-member state. For example, an EU-member state might prohibit or suspend exports of personal data from its country under SCCs, if the member state concludes that the SCCs are not or cannot be complied with in the recipient third country (such as the U.S.) because of the member state’s local legal requirements.

The CJEU did not directly reference binding corporate rules (‘BCRs’) which are used for intragroup data transfers and require prior approval of the competent data protection authority. For now, this means that BCRs remain a valid transfer mechanism under the GDPR as BCRs are of a similar nature to  SCCs (both are considered an “appropriate safeguard” pursuant to Article 46 GDPR).

For some situations, an alternative is to look to the narrow derogations under Article 49 of the GDPR, such as to perform a contract or base the transfer on the subject’s explicit consent.  

What happens next

When the adequacy of the Safe Harbor was invalidated by the CJEU in 2015, the U.S. Department of Commerce (DOC) and the EC had already been negotiating for an updated trans-Atlantic program for many months. With Schrems II, and although the DOC and EC have indicated that lines of communication are open, the discussions are not nearly as advanced. And the issues cited by the CJEU in Schrems II may require some form of legislative and not merely an administrative action to address. As such, the process to revamp the Privacy Shield is unlikely to be concluded any time soon.  

The DOC, in a press release in response to the CJEU’s decision, and later in its updated Privacy Shield FAQs, stated that it will continue to administer the Privacy Shield program, including processing submissions for self-certification and re-certification and maintaining the participants’ list. The DOC emphasized that the CJEU’s decision “does not relieve participating organizations of their Privacy Shield obligations.”

The UK’s Data Enforcement Agency also issued a statement advising companies to continue using the Privacy Shield until new guidance becomes available but added that companies “do not start using the Privacy Shield during this period.”

Stay tuned for more regulatory guidance and other developments in the next few weeks.

Disclaimer: This is not legal advice. The resources and information provided here are for educational purposes only. Consult your own counsel if you have legal questions related to your specific practices and compliance with applicable laws.

July 30th, 2020|Judgment|

The CFPB issues new policy guidance on credit reporting and dispute resolution

On April 1, 2020, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) issued a non-binding general policy statement (“Policy Statement”) regarding the Fair Credit Reporting Act (FCRA) and Regulation V in light of the recently enacted Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

The CFPB’s Policy Statement highlights furnishers’ responsibilities and informs consumer reporting agencies (“CRAs”) of the Bureau’s flexible supervisory and enforcement approach during this pandemic. The Bureau intends to consider the circumstances that entities face as a result of the COVID-19 pandemic and their good faith efforts to comply with statutory and regulatory obligations as soon as possible.

The Bureau believes that this flexibility will help furnishers and CRAs to manage the challenges of the current crisis. Below are examples of the flexibility the Bureau intends to provide in the consumer reporting system.

Furnishing consumer information impacted by COVID-19: The Bureau reiterates its prior guidance encouraging financial institutions to work constructively with borrowers and other customers affected by COVID-19 to meet their financial needs. While companies generally are not legally obligated to furnish information to CRAs, the Bureau encourages them to continue doing so despite the current crisis. Furnishers’ providing accurate information to CRAs produces substantial benefits for consumers, users of consumer reports, and the economy as a whole. The CARES Act, a section of which amends the FCRA, generally requires furnishers to report as current certain credit obligations for which furnishers make payment accommodations to consumers affected by COVID-19 who have sought such accommodations from their lenders. Many furnishers are or will be offering consumers affected by COVID-19 various forms of payment flexibility, including allowing consumers to defer or skip payments, as required by the CARES Act or voluntarily. Such payment accommodations will avoid the reporting of delinquencies resulting from the effects of COVID-19. The Bureau supports furnishers’ voluntary efforts to provide payment relief, and it does not intend to cite in examinations or take enforcement actions against those who furnish information to CRAs that accurately reflects the payment relief measures they are employing.

Disputes: The FCRA generally requires that CRAs and furnishers investigate disputes within 30 days of receipt of the consumer’s dispute. The 30-day period may be extended to 45 days if the consumer provides additional information that is relevant to the investigation during the 30-day period. The Bureau is aware that some CRAs and furnishers may face significant operational disruptions that pose challenges in the investigations. For example, some CRAs and furnishers may experience reductions in staff, difficulty in taking disputes, or lack of access to necessary information, rendering them unable to investigate the disputes within the timeframes the FCRA requires. Furnishers include a wide variety of businesses that vary in size and sophistication and can range from small retailers to very large financial services firms, each of which will face unique challenges due to the COVID-19 pandemic. In evaluating compliance with the FCRA as a result of the pandemic, the Bureau will consider a CRA’s or furnisher’s individual circumstances and does not intend to cite in an examination or bring an enforcement action against a CRA or furnisher making good faith efforts to investigate disputes as quickly as possible, even if dispute investigations take longer than the statutory timeframe. The Bureau reminds furnishers and CRAs that they may take advantage of statutory and regulatory provisions that eliminate the obligation to investigate disputes submitted by credit repair organizations and disputes they reasonably determine to be frivolous or irrelevant. The Bureau will consider the current constraints on furnishers’ and CRAs’ time, information, and other resources in assessing if such a determination is reasonable.

Regulatory requirements: The Policy Statement is a non-binding general statement of policy articulating considerations relevant to the Bureau’s exercise of its supervisory and enforcement authorities. It is therefore exempt from the notice and comment rulemaking requirements under the Administrative Procedure Act pursuant to 5 USC 553(b).

Resources for consumers and small businesses facing the impacts of the COVID-19 pandemic are available on the Bureau’s website at https://www.consumerfinance.gov/coronavirus/.

April 3rd, 2020|Guidance|

Q1 2020: UPDATE OF LAWS AFFECTING EMPLOYMENT BACKGROUND SCREENING

As the year and a new decade unfold, we bring you this update on ban-the-box legislation and laws that restrict credit report usage in employment decisions. And no update would be complete without a reminder about a standard-setting federal appellate opinion from 2019 interpreting the Fair Credit Reporting Act (FCRA) disclosure requirement for an employment background check.

Let’s start with a reminder

In January 2019, the Ninth Circuit’s opinion in Gilberg v. California Check Cashing Stores, LLC made clear that any extraneous information in an FCRA disclosure form regarding an employment background check — even if the information is related to state-mandated expansions of consumer rights — violates the FCRA’s requirement that the disclosure must be “in a document that consists solely of the disclosure.

Even seemingly innocuous content, such as asking for an acknowledgment that the candidate received the FCRA summary of rights or including a statement that hiring decisions are based on legitimate non-discriminatory reasons may run afoul of the FCRA. And any state and local notices regarding the background check must be provided in separate documents, as applicable to each candidate.

Experts believe that the number of class-action lawsuits brought under the FCRA for technical errors will continue to increase. But there is an easy way to comply:

Present the disclosure to the candidate in a separate, standalone, conspicuous document. Make it clear and simple. Keep it short.

Ban-the-box laws continue to proliferate

“Ban-the-box” measures – which generally prohibit employers from inquiring about a candidate’s criminal history (including performing background checks) until later in the hiring process – continue to proliferate. Currently, 14 states (California; Colorado; Connecticut; Hawaii; Illinois; Maryland (effective February 29, 2020); Massachusetts; Minnesota; New Jersey; New Mexico; Oregon; Rhode Island; Vermont and Washington) and 22 local jurisdictions (Austin, TX ; Baltimore, MD; Buffalo, NY; Chicago, IL; Cook County, IL; Columbia, MO; District of Columbia; Grand Rapids, MI; Kansas City, MO; Los Angeles, CA; Montgomery County, MD; New York City, NY;  Philadelphia, PA; Portland, OR; Prince George’s County, MD; Rochester, NY; Saint Louis, MO (effective January 1, 2021); San Francisco, CA; Seattle, WA; Spokane, WA; Waterloo, IA (effective July 1, 2020 but lawsuit filed to strike down the ordinance); and Westchester County, NY) have such laws in place for private employers.

Be mindful of credit restrictions

Less popular than state and local legislatures on ban-the-box and prohibitions on salary history inquiries, credit check restrictions remain an important consideration for employers. Ten states California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington – as well as Chicago, District of Columbia, New York City, and Philadelphia all place restrictions on employers’ use of credit reports with exceptions for the use of such checks when required by law or the responsibilities of the position.      

Arguably, the most imposing local credit report law to date continues to be the New York City’s Human Rights amendment that went into effect on May 6, 2015, and made requesting and using consumer credit history for hiring and other employment purposes, with certain exceptions, an unlawful discriminatory practice. The law provides that a “consumer credit report” includes “any written or other communication of any information by a consumer reporting agency that bears on a consumer’s creditworthiness, credit standing, credit capacity or credit history.”Many legal experts hold that the broad scope of this definition not only prohibits obtaining a consumer credit report but also searches of liens, judgments, bankruptcies, and financially-related lawsuits if there is no exemption. There is no case law on this matter. 

On the national level, the U.S. House of Representatives on January 29, 2020, passed legislation that prohibits employers from using credit reports for employment decisions, except when required by law or for a national security clearance. The bill also prohibits asking questions about applicants’ financial past during job interviews or including questions about credit history on job applications. The U.S. Senate, however, is not expected to introduce the legislation.

March 6th, 2020|Employment Decisions|

Ninth Circuit Defines “Standalone, Clear and Conspicuous” Disclosure for Obtaining Employment-Purpose Background Checks

On January 29, 2019, the U.S. Court of Appeals for the Ninth Circuit in Gilberg v. California Check Cashing Stores, LLC instructed employers about the importance of complying with background check disclosure requirements found in the Fair Credit Reporting Act (FCRA).

Pursuant to the federal statute, employers who want to obtain a consumer report (commonly referred to as a background check report) on a job candidate must provide to the candidate a “clear and conspicuous disclosure” about the report in a document that consists “solely of the disclosure.” 15 U.S.C. § 1681b(b)(2)(A).

But when Desiree Gilberg applied for a job with CheckSmart Financial, she received something different. First Gilberg completed a three-page form containing an employment application, a math screening and an employment history verification. She then signed a separate form entitled, “Disclosure Regarding Background Investigation.”

The one-page form included the required FCRA disclosure as well as mandated state disclosures for California, Maine, Minnesota, New York, Oklahoma, Oregon and Washington.

Gilberg worked for CheckSmart for five months before voluntarily leaving the job. She then filed a putative class action against the company, alleging that it failed to make proper disclosures as set forth in both the FCRA and California’s Investigative Consumer Reporting Agencies Act (ICRAA).

A district court sided with the employer and dismissed the case. The judge agreed with CheckSmart that its disclosure form complied with both statutes. Gilberg appealed to the Ninth Circuit. She argued that the standalone requirement didn’t permit the combination of state and federal disclosures as CheckSmart had tried.

Considering the issue, the Ninth Circuit recalled a 2017 decision in Syed v. M-I, LLC. In that case, which also involved the standalone requirement, the federal appellate panel held that a prospective employer violated the FCRA when it included a liability waiver in the same document as the mandated disclosure. The statute means what it says, the court emphasized: the required disclosure must be in a document that “consist

[s] ‘solely’ of the disclosure.”

In an effort to distinguish its disclosure from that in the Syed case, CheckSmart told the court that the additional information in its form actually furthered the FCRA’s purpose.

“We disagree,” the court wrote. “Syed’s holding and statutory analysis were not limited to liability waivers; Syed considered the standalone requirement with regard to any surplusage. Syed grounded its analysis of the liability waiver in its statutory analysis of the word ‘solely,’ noting that FCRA should not be read to have implied exceptions, especially when the exception – in that case, a liability waiver – was contrary to FCRA’s purpose. Syed also cautioned ‘against finding additional, implied exceptions’ simply because Congress had created one exception. Consistent with Syed, we decline CheckSmart’s invitation to create an implied exception here.”

Plain meaning trumps purpose, the Ninth Circuit said, rejecting the employer’s contention that its disclosure form was consistent with the intent of the FCRA. Since the surplus language included disclosures required by various state laws that were inapplicable to Gilberg, the court was unable to understand how the CheckSmart form comported with the purpose of the federal statute.

“Because the presence of this extraneous information is as likely to confuse as it is to inform, it does not further FCRA’s purpose,” the court declared.

“Syed holds that the standalone requirement forecloses implicit exceptions,” the panel wrote. “The statute’s one express exception does not apply here, and CheckSmart’s disclosure contains extraneous and irrelevant information beyond what FCRA itself requires. The disclosure, therefore, violates FCRA’s standalone document requirement. Even if congressional purpose were relevant, much of the surplusage in CheckSmart’s disclosure form does not effectuate the purposes of the FCRA.”

In addition to ruling that the district court erred in concluding that the employer’s disclosure form satisfied the FCRA’s standalone document requirement, the Ninth Circuit also held that CheckSmart’s disclosure form was not “clear and conspicuous” under either FCRA or ICRAA.

The court grudgingly found the form to be “conspicuous” (despite characterizing the font as “inadvisably” small and cramped) but held it was not “clear.” The disclosure contained language a reasonable person would not understand, the court said, and its content would confuse a reader with the combination of federal and state disclosures.

As “CheckSmart’s disclosure form was not both clear and conspicuous, the district erred in granting CheckSmart’s motion for summary judgment with regard to the FCRA and ICRAA ‘clear and conspicuous’ requirements,” the panel wrote. The Ninth Circuit reversed dismissal of Gilberg’s complaint and remanded the case to the California district court. (As of this writing, there is a petition for rehearing and rehearing en banc pending before the 9th Circuit.)

For employers, the Ninth Circuit opinion could not be more clear: ensure that the FCRA disclosure form provided to job candidates contains no extraneous or surplus language. The decision also provides an important reminder about keeping disclosures forms clear and conspicuous in order to comply with both federal and state laws.

Pursuant to the federal statute, employers who want to obtain a consumer report (commonly referred to as a background check report) on a job candidate must provide to the candidate a “clear and conspicuous disclosure” about the report in a document that consists “solely of the disclosure.” 15 U.S.C. § 1681b(b)(2)(A).

But when Desiree Gilberg applied for a job with CheckSmart Financial, she received something different. First Gilberg completed a three-page form containing an employment application, a math screening and an employment history verification. She then signed a separate form entitled, “Disclosure Regarding Background Investigation.”

The one-page form included the required FCRA disclosure as well as mandated state disclosures for California, Maine, Minnesota, New York, Oklahoma, Oregon and Washington.

Gilberg worked for CheckSmart for five months before voluntarily leaving the job. She then filed a putative class action against the company, alleging that it failed to make proper disclosures as set forth in both the FCRA and California’s Investigative Consumer Reporting Agencies Act (ICRAA).

A district court sided with the employer and dismissed the case. The judge agreed with CheckSmart that its disclosure form complied with both statutes. Gilberg appealed to the Ninth Circuit. She argued that the standalone requirement didn’t permit the combination of state and federal disclosures as CheckSmart had tried.

Considering the issue, the Ninth Circuit recalled a 2017 decision in Syed v. M-I, LLC. In that case, which also involved the standalone requirement, the federal appellate panel held that a prospective employer violated the FCRA when it included a liability waiver in the same document as the mandated disclosure. The statute means what it says, the court emphasized: the required disclosure must be in a document that “consist[s] ‘solely’ of the disclosure.”

In an effort to distinguish its disclosure from that in the Syed case, CheckSmart told the court that the additional information in its form actually furthered the FCRA’s purpose.

“We disagree,” the court wrote. “Syed’s holding and statutory analysis were not limited to liability waivers; Syed considered the standalone requirement with regard to any surplusage. Syed grounded its analysis of the liability waiver in its statutory analysis of the word ‘solely,’ noting that FCRA should not be read to have implied exceptions, especially when the exception – in that case, a liability waiver – was contrary to FCRA’s purpose. Syed also cautioned ‘against finding additional, implied exceptions’ simply because Congress had created one exception. Consistent with Syed, we decline CheckSmart’s invitation to create an implied exception here.”

Plain meaning trumps purpose, the Ninth Circuit said, rejecting the employer’s contention that its disclosure form was consistent with the intent of the FCRA. Since the surplus language included disclosures required by various state laws that were inapplicable to Gilberg, the court was unable to understand how the CheckSmart form comported with the purpose of the federal statute.

“Because the presence of this extraneous information is as likely to confuse as it is to inform, it does not further FCRA’s purpose,” the court declared.

“Syed holds that the standalone requirement forecloses implicit exceptions,” the panel wrote. “The statute’s one express exception does not apply here, and CheckSmart’s disclosure contains extraneous and irrelevant information beyond what FCRA itself requires. The disclosure therefore violates FCRA’s standalone document requirement. Even if congressional purpose were relevant, much of the surplusage in CheckSmart’s disclosure form does not effectuate the purposes of the FCRA.”

In addition to ruling that the district court erred in concluding that the employer’s disclosure form satisfied the FCRA’s standalone document requirement, the Ninth Circuit also held that CheckSmart’s disclosure form was not “clear and conspicuous” under either FCRA or ICRAA.

The court grudgingly found the form to be “conspicuous” (despite characterizing the font as “inadvisably” small and cramped) but held it was not “clear.” The disclosure contained language a reasonable person would not understand, the court said, and its content would confuse a reader with the combination of federal and state disclosures.

As “CheckSmart’s disclosure form was not both clear and conspicuous, the district erred in granting CheckSmart’s motion for summary judgment with regard to the FCRA and ICRAA ‘clear and conspicuous’ requirements,” the panel wrote. The Ninth Circuit reversed dismissal of Gilberg’s complaint and remanded the case to the California district court. (As of this writing, there is a petition for rehearing and rehearing en banc pending before the 9th Circuit.)

For employers, the Ninth Circuit opinion could not be more clear: ensure that the FCRA disclosure form provided to job candidates contains no extraneous or surplus language. The decision also provides an important reminder about keeping disclosures forms clear and conspicuous in order to comply with both federal and state laws.

March 2nd, 2019|Employment Decisions, Judgment|
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