Ninth Circuit: Liability Waiver Violates FCRA

Last month, the Ninth Circuit Court of Appeals ruled that an employer’s inclusion of a liability waiver in a background check disclosure is a willful violation of the Fair Credit Reporting Act (FCRA). Syed v. M-I, LLC (9th Cir. 2017).

FCRA provides that an employer must, prior to obtaining a background check report through a consumer reporting agency, make a “clear and conspicuous” written disclosure to the individual, advising him or her that a background check report may be obtained. FCRA requires that this written disclosure be made in a document consisting “solely” of the disclosure. The applicant or employee must also consent in writing to the report before it is obtained.

Suits brought under FCRA against employers tend to allege failure to comply with this “sole disclosure” requirement. Applicants and employees have also alleged that including a liability waiver with the disclosure form also violates this requirement; however, the issue had never been settled in the Ninth Circuit, which includes Alaska, Arizona, California, and Hawaii.

In a 1998 advisory letter, the Federal Trade Commission opined that including a liability waiver in a background check disclosure violates FCRA’s “sole disclosure” requirement. However, FTC advisory letters are not binding on any court.

In Syed, the Ninth Circuit Court of Appeals held that FCRA was clear and unambiguous regarding an employer’s inclusion of any terms beyond the mandatory disclosure language. The inclusion of a liability waiver, the Ninth Circuit held, is a willful violation of the FCRA’s “sole disclosure” requirement.

FCRA provides multiple ways for a plaintiff to recover damages and includes a complex statute of limitations. Accordingly, employers who have questions should contact MSEC without delay.