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Willful Violations Of the Fair Credit Reporting Act
Is An Employer’s Inclusion Of A Liability Waiver In A Background Check Disclosure Still A Willful Violation Of the Fair Credit Reporting Act (FCRA)
Yes, based on numerous court rulings, particularly a key decision by the Ninth Circuit Court of Appeals in Syed v. M-I, LLC (2017), an employer's inclusion of a liability waiver in a background check disclosure is generally considered a willful violation of the Fair Credit Reporting Act (FCRA).
Here's why:
"Sole Disclosure" Requirement: The FCRA (specifically 15 U.S.C. § 1681b(b)(2)(A)) mandates that before an employer can procure a consumer report (background check) for employment purposes, they must provide a "clear and conspicuous disclosure... in a document that consists solely of the disclosure."
Waivers are "Extraneous Information": Courts, especially the Ninth Circuit, have consistently interpreted "solely of the disclosure" very strictly. They have held that a liability waiver, or any other extraneous information not explicitly permitted by the statute, detracts from the clarity and purpose of the disclosure, which is to inform the applicant that a background check will be conducted. The only exception explicitly allowed by the FCRA is the applicant's written authorization to obtain the report, which can be included in the same document as the disclosure.
Willful Violation: A "willful violation" under the FCRA means that the employer either knowingly violated the FCRA or acted with reckless disregard for its requirements. The Syed decision found that even in the absence of prior direct guidance on this specific issue, the statutory language was clear enough that including a liability waiver constituted a reckless disregard of the FCRA's duty, thus making it a willful violation. This opens employers to higher damages, including statutory damages (between $100 and $1,000 per violation), punitive damages, and attorney's fees and costs, even if the employee suffered no actual harm.
What Employers Should Do:
To comply with the FCRA and avoid willful violation claims, employers should ensure their background check disclosure forms:
-Consist SOLELY of the disclosure that a consumer report may be obtained for employment purposes.
--May include the written authorization for the background check in the same document.
--DO NOT include any other extraneous information, especially liability waivers, arbitration agreements, or any other legal disclaimers. These should be in separate documents.
--Employers should regularly review their background check forms and processes with legal counsel to ensure compliance with the FCRA and any relevant state or local laws, as some states may have even stricter requirements.
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