Legislative Update: Do Not Include Company Liability Waivers in Employment Screening Disclosures

On March 20, 2017, an important court case affecting the legally permissible language contained within employers’ pre-hire background screening disclosures was recently amended.   Disclosures should be reviewed for compliance by all employers conducting/receiving employment related background screening services. The law governing this subject matter is the Fair Credit Reporting Act (FCRA) and provides important consumers protections against businesses who might not abide by its statutes while the Federal Trade Commission and the Consumer Financial Protection Bureau are the enforcement entities.

Regarding the recent applicable case, The U.S. Court of Appeals, Ninth Circuit heard case No. 14-17186, Syed v. M-I, LLC/Precheck, Inc.,1 and has made its final ruling. The panel of judges in this case have denied a petition for a rehearing of the case for questioning the legality of inclusion of liability waivers in said disclosures. The disclosures in question are those which are authored and distributed by end-users (employers) for disclosing to job applicants that a background check will be requested on them during the pre-employment hiring process. Per the FCRA, pre-employment disclosures supplied to job candidates must meet the term “Sole” requirement of the 15 USC 1681b(b)(2)(A)(i), i.e., that no other additional information may be included in the disclosure other than verbiage informing the job applicant that a consumer report will be obtained about them at some point in the hiring process.

Per the new ruling shown below, companies such as M-I, LLC/Precheck, Inc., are in willful violation of the FCRA. The following is Judge Wardlaw’s opinion:


WARDLAW, Circuit Judge:

The modern information age has shined a spotlight on information privacy, and on the widespread use of consumer credit reports to collect information in violation of consumers’ privacy rights. This case presents a question of first impression in the federal courts of appeals: whether a prospective employer may satisfy the Fair Credit Reporting Act’s (“FCRA”) disclosure requirements by providing a job applicant with a disclosure that “a consumer report may be obtained for employment purposes” which simultaneously serves as a liability waiver for the prospective employer and others.1 See 15 U.S.C. § 1681b(b)(2)(A). We hold that a prospective employer violates Section 1681b(b)(2)(A) when it procures a job applicant’s consumer report after including a liability waiver in the same document as the statutorily mandated disclosure. We also hold that, in light of the clear statutory language that the disclosure document must consist “solely” of the disclosure, a prospective employer’s violation of the FCRA is “willful” when the employer includes terms in addition to the disclosure, such as the liability waiver here, before procuring a consumer report or causing one to be procured.

It is vital for employers to implement into a routine annual process the legal review of their employment disclosures for potential revisions. This action is a best practice within the background screening industry.

*The content within this article does not constitute legal advice and should not be relied upon as such. If you need legal advice on this or other matters, please contact legal counsel. With all other questions, please contact Validity at (866)256-0624.