May 2020 | Compliance Update

Federal Developments

DOT and FMCSA Guidance for Managing Disruptions to Regulated Drug and Alcohol Testing Due to COVID-19

On March 23, the Department of Transportation (“DOT”) issued guidance for conducting DOT-required drug and alcohol testing in safety-sensitive transportation fields (aviation, trucking, mass transit, railroads) in light of concerns that disruptions caused by COVID-19 were interfering with, and even preventing, compliance with testing requirements. The next day, the Federal Motor Carrier Safety Administration (“FMCSA”) issued its own guidance, effective through June 30, 2020, clarifying how motor carriers and employees should manage any disruptions to testing. The FMCSA offers the following guidance for motor carriers unable to conduct required testing due to the unavailability of program resources (collection sites, breath alcohol technicians, medical review officers, etc.), COVID-19-related supply shortages, facility closures, state or local government quarantine, stay-at-home, or social distancing requirements, and other impediments:

  1. Random testing: 49 C.F.R. § 382.305(k) requires motor carriers to ensure that dates for random alcohol and drug tests are spread reasonably throughout the calendar year. Random testing must be performed at rates of 50% (drug) and 10% (alcohol). The FMCSA suggests it be done quarterly. If COVID-19-related disruptions prevent a motor carrier from performing random selections and tests sufficient to meet the 50%/10% rate, the carrier should: (1) make up the tests by the end of the year; and (2) document in writing the reasons why tests could not be performed and the actions taken to locate alternative collection sites or other testing resources.
  2. Pre-employment testing: Unless the exception in 49 C.F.R. § 382.301(b) applies (participation in a prior testing program within the previous 30 days), a motor carrier that is unable to conduct a pre-employment drug test in accordance with 49 C.F.R. § 382.301(a) cannot allow the subject prospective employee to perform any DOT safety-sensitive functions until a negative pre-work test result is received.
  3. Post-accident testing: 49 C.F.R. § 382.303 requires motor carriers to test each accident-involved driver for drugs and alcohol as soon as practicable following an accident. If due to COVID-19-related disruptions a motor carrier cannot administer an alcohol test within 8 hours, or a drug test within 32 hours, the motor carrier must document in writing the specific reasons why the test could not be conducted.
  4. Reasonable suspicion testing: Under 49 C.F.R. § 382.307, motor carriers who reasonably suspect that a driver has violated drug or alcohol prohibitions must require that driver to submit to testing. In addition to documenting the contemporaneous observations that led to the test (i.e., the driver’s appearance, behavior, speech, or odors), a motor carrier who is unable to obtain testing should document the specific reasons why testing could not be obtained (including efforts made to find alternative collection sites) and follow the rules in Section 382.307(e).
  5. Return-to-duty testing after drug/alcohol treatment: In accordance with 49 C.F.R. § 40.305(a), motor carriers must not allow a driver to perform safety-sensitive functions until return-to-duty testing is conducted and a negative result is obtained. Follow-up testing after return-to-duty process: If testing cannot be completed, the motor carrier should: (1) document why testing could not be completed in accordance with the testing plan, including efforts made to mitigate the effect of any COVID-19-related disruption; and (2) conduct the test as soon as practicable.

The FMCSA encourages motor carriers and employers to respond to employee concerns regarding the safety of obtaining drug and alcohol testing in the current environment in a sensitive and respectful way. The responsibility for evaluating the circumstances of what constitutes an employee’s refusal to test, and to determine whether the employee’s actions or stated objections should be considered a refusal to test under 49 C.F.R. § 40.355(i), belongs to the motor carrier.

DOL Publishes Additional FAQs, Making Clear That Employees on Furlough or Layoff Are Not Eligible for FFCRA Paid Sick Leave or Expanded FMLA

The Department of Labor issued additional FAQs on Thursday March 26. They now offer 37 FAQs on how the paid sick leave and expanded FMLA leave under the Families First Coronavirus Response Act will apply. The leave obligations begin April 1, 2020. As more and more employers are required to shutdown due to state orders or layoff employees due to business concerns, a frequently asked question is whether the employees impacted by these closures and layoffs will still be eligible for paid sick leave and paid FMLA leave under the FFCRA. According to the FAQs issued by the DOL, they will not:

#24. If my employer closes my worksite on or after April 1, 2020 (the effective date of the FFCRA), but before I go out on leave, can I still get paid sick leave and/or expanded family and medical leave?
No. If your employer closes after the FFCRA’s effective date (even if you requested leave prior to the closure), you will not get paid sick leave or expanded family and medical leave, but you may be eligible for unemployment insurance benefits. This is true whether your employer closes your worksite for lack of business or because it was required to close pursuant to a Federal, State or local directive. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. ***

#26. If my employer is open, but furloughs me on or after April 1, 2020 (the effective date of the FFCRA), can I receive paid sick leave or expanded family and medical leave?
No. If your employer furloughs you because it does not have enough work or business for you, you are not entitled to then take paid sick leave or expanded family and medical leave. However, you may be eligible for unemployment insurance benefits. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility.

For additional information, please refer to In addition to several FAQs on the impact of layoffs and furloughs, the FAQs also address what documentation employers should request, whether the paid sick leave and paid FMLA can be used intermittently and whether other employer-offered paid leave can be used concurrently with that required by FFCRA.

CFPB Issues Credit Reporting Guidance During COVID-19 Pandemic

On April 1, the Consumer Financial Protection Bureau (CFPB) issued a policy statement addressing credit reporting issues faced by consumers and credit furnishers in light of the COVID-19 pandemic. The purpose of the policy statement is to highlight furnishers’ responsibilities under the recently enacted CARES Act and inform consumer reporting agencies and furnishers of the Bureau’s flexible supervisory and enforcement approach regarding compliance with the Fair Credit Reporting Act (FCRA) and Regulation V. A separate alert on the provisions of the CARES Act amending FCRA is available here. The CFPB notes this policy statement is not a formal, binding rule-making but instead is a non-binding general statement of policy articulating considerations relevant to the Bureau’s exercise of its supervisory and enforcement authorities. The CFPB acknowledges in the policy statement that flexibility is necessary given the impact of the pandemic on the more than 10,000 credit furnishers in the United States. The Bureau notes that while credit furnishing is not legally required, the CFPB encourages furnishers to continue furnishing information to the credit reporting agencies. The CFPB also reiterates prior guidance encouraging financial institutions to work constructively with borrowers during the crisis. A separate alert addressing that guidance is available here.
In the Policy Statement, the Bureau sets forth specific circumstances in which it intends to be flexible:

  • While the CFPB expects furnishers to comply with the CARES Act’s amendments to FCRA regarding not reporting as delinquent virus-related accommodations to borrowers, if furnishers make other, voluntary payment accommodations, the CFPB does not intend to cite in examinations or take enforcement actions if the furnished reports accurately reflect the payment relief measures taken by the furnisher.
  • Although FCRA requires consumer reporting agencies and furnishers to investigate disputes within 30 to 45 days from receipt of the dispute, the CFPB will consider individual circumstances when evaluating compliance with these timeframes given difficulties furnishers may face in completing timely investigations. The CFPB does not intend to cite in examinations or take enforcement actions against consumer reporting agencies or furnishers that exceed the required timeframe to investigate disputes, but who do make good faith efforts to investigate disputes as quickly as possible.
  • Furnishers and consumer reporting agencies may avail themselves of statutory and regulatory provisions eliminating the obligation to investigate disputes submitted by credit repair organizations and disputes they reasonably determine to be frivolous or irrelevant. The CFPB will consider constraints to resources caused by the pandemic in assessing if such a determination is reasonable.

FTC Guidance on AI: Don’t Surprise Consumers – Or Yourself

FTC Bureau of Consumer Protection Director Andrew Smith this week published some helpful pointers for companies that are developing or using AI to support consumer-facing services. These pointers are drawn from past FTC enforcement actions, reports, and workshops. They boil down to one overarching message: Companies shouldn’t surprise consumers – or themselves – in how they develop or use AI.

Taking care with AI can bring benefits beyond helping to avoid FTC scrutiny. It can also help avoid frayed relationships with consumers and business partners. In addition, paying attention to AI now may leave companies better prepared to deal with future regulations, such as the profiling and automated decision-making provisions of the California Privacy Rights Act ballot initiative.  

Director Smith’s recommendations fall under four main categories:

  • Be transparent;
  • Explain your decision to the consumer;
  • Ensure that your decisions are fair; and
  • Ensure that your data and models are robust and empirically sound.

Although many of these messages relate to sector-specific laws that the FTC enforces, such as the Fair Credit Reporting Act (FCRA) and Equal Credit Opportunity Act (ECOA), they have broader applicability. This post takes a closer look at some of the wider implications of the FTC’s AI guidance.

Keep an Eye on Sectoral Privacy Lines. Long-established laws such as the FCRA, ECOA, and Title VII of the Civil Rights Act of 1964 apply to uses of AI in the areas of consumer reporting; consumer credit; and voting, education, and the offering of public accommodations, respectively. Meeting the obligations of these laws depends on recognizing whether and when they apply. However, the laws discussed in the FTC’s blog post are far from exhaustive. One important law to add to those flagged in the blog post: HIPAA. Although it is usually clear when an entity is acting as a healthcare provider, insurer, or clearinghouse, it may be more challenging to determine when a company becomes a “business associate” of a covered entity. The response to COVID-19 has accelerated the race to develop health-related AI applications, which makes it more urgent for companies to recognize when they are acting as business associates and to understand their responsibilities under HIPAA.

Comprehensively Evaluate Data and AI Models. According to the blog post, the FTC has developed legal and economic criteria for evaluating the presence of illegal discrimination in AI systems – at least in the ECOA context. Specifically, the agency will look at inputs to determine whether they include “ethnically-based factors, or proxies for such factors, such as census tract” as well as outcomes, “such as the price consumers pay for credit, to determine whether a model appears to have a disparate impact on people in a protected class.”

The post strongly suggests that the FTC’s attention to potential discrimination through uses of AI is not so limited: “Companies using AI and algorithmic tools should consider whether they should engage in self-testing of AI outcomes, to manage the consumer protection risks inherent in such models” (emphasis added). The FTC, however, does not offer a framework for these evaluations, nor has it indicated more generally what kinds of AI discrimination risks might be actionable under Section 5. Still, making good-faith efforts to identify and mitigate such risks could help companies to stay ahead of the enforcement curve.

Conduct Due Diligence on Vendors and Constrain Downstream Users. A another theme that runs throughout the FTC’s AI guidance (as well as its privacy, data security, telemarketing, and other areas of FTC consumer protection policy): companies should carefully assess how upstream providers of AI-related data and analytics comply with their legal obligations, and they should impose appropriate constraints to prevent their own customers from using AI services in inappropriate or illegal ways. Although the FTC focuses on upstream and downstream requirements under FCRA and ECOA, these considerations are equally important when Section 5 is the main consideration and staying out of more highly regulated activities is the intent. Conducting due diligence before entering into an AI-related business relationship, requiring contract terms that spell out permissible uses of AI systems and data inputs, and monitoring the performance of business partners are all critical to achieving these ends.

State Developments

Equal Pay Day 2020: Seyfarth’s Release of Equal Pay Resources

Equal Pay Day is always a day of deep reflection and connection for our Pay Equity Group. The day is filled with webinars, phone calls and interviews, flights, in-person meetings and hallway greetings. This year, instead of flying around the country, we are working from homes, preparing final materials in make-shift home offices between “homeschooling” sessions. At least one of our planning calls was interrupted by a new “co-worker” roller-skating down the hallway. But putting the final touches on our communications in the quiet of the morning, we reflect on the way the global pandemic has had a way of clarifying and crystalizing the core of what is important. As Kori Carew, Seyfarth’s Chief Inclusion & Diversity Officer, wisely stated that “Our need for connection and belonging likely hasn’t been greater for most of our lifetimes.” So even though we have made the decision to move our webinar until later in the year, we wanted to share these reference materials. We are grateful that we can support the efforts of so many employers who are proactively working to ensure equal pay on a daily basis. As we offer these resources to you today, we plan to hold a substantive webinar in the summer when we can collectively focus on the legal issues, trends and practices that propel our combined work and focus on ensuring equal pay for all. As we are looking back at 2019 and forward to the new world that 2020 and beyond presents, we see three key trends:

The Continued Passage of Pay Laws: Since the beginning of 2019, we saw new pay laws enacted or strengthened in eleven states. Alabama, which was one of only two states without any state pay equity laws, passed an equal pay law and also enacted a quasi-salary history ban. Colorado passed a law that will require employers, beginning in January 2021 to include the pay scale on job postings. Nebraska passed a wage transparency law. There are new or amended salary history bans in Illinois, Maine, New Jersey, New York, and Washington state. There are also new equal pay laws or increased penalties for violations of equal pay laws in Illinois, Maryland, Nevada, New York, and Wyoming. The Fourth Annual 50-State Pay Equity Desktop Reference outlines many of these changes at the state-level.

  • Increased Pay Litigation: Over the years, we have seen an increase in litigation under the federal Equal Pay Act and analogous state laws with noticeable focus on state law claims. With over 300 pure “pay” cases filed in the last two years, we see a concentration of cases in California, Florida, and Texas. Those cases are already generating new and intriguing legal issues that have the potential to reshape the landscape of pay equity litigation, including whether and how those claims can be maintained as collective or class actions. The 2020 edition of the Developments in Pay Litigation Report, authored by our colleague Matt Gagnon, outlines these cases and trends.
  • A Global Focus on Pay Equity: In 2019, we saw employers continue to focus on global pay equity issues, to be more transparent about pay along with an increased appetite for additional data and metrics. As our global workforces are impacted by COVID-19, we believe that the desire to connect, to demonstrate belonging will be even more important in 2020.

Oakland County, Michigan Orders Employers of Critical Infrastructure Workers and Essential Employees to Implement Screening and Social Distancing Measures

Under Michigan’s Stay Home, Stay Safe Executive Order effective March 24, 2020, only essential businesses or operations that employ critical infrastructure workers are allowed to continue in-person operations.1 The Order, which remains in effect until April 13, 2020, also allows non-essential businesses to designate employees as essential if their in-person presence is “strictly necessary” to maintain the value of inventory and equipment, to care for animals, to ensure security, to process transactions, or to help other employees work remotely.

On March 25, 2020, the Oakland County Health Division issued an amended emergency order requiring employers of critical infrastructure workers at open businesses and operations, and employers of employees designated as essential for carrying out minimum business operations, to develop and implement a daily screening program for all such employees.2 The screening criteria must include these questions:

  1. Whether the employee has had a fever, cough, shortness of breath, sore throat, or diarrhea. If a touchless thermometer is available, a temperature check is “strongly recommended” in lieu asking the employee if they have had a fever.
  2. Whether the employee has had any close contact in the previous 14 days with someone diagnosed with COVID-19.
  3. Whether the employee has travelled outside of Michigan in the previous 14 days.

If the employee responds “yes” to question 1, the employer must exclude the employee from work until the employee has had no fever for at least 72 hours AND their other symptoms have improved AND at least 7 days have passed since their symptoms first appeared. If the employee responds “yes” to question 2, the employer must exclude the employee from work until 14 days after the close contact. If the employee responds “yes” to question 3, the employer must exclude the employee from work until 14 days after the travel unless the travel was associated with the employee commuting between their home outside of Michigan and their place of employment in Michigan. The Health Division has created a Staff Screening Checklist for Businesses to help employers comply with the Emergency Order. Exempted from the Order are healthcare organizations with an infection control program in place.

The Emergency Order, which remains in effect until April 13, 2020, also requires employers of critical infrastructure workers at open businesses and operations, and employers of employees designated as essential for conducting minimum business operations, to develop and implement a plan to maintain social distancing of at least six feet between employees working alongside each other and customers waiting in lines inside or outside of the business. Where necessary to meet this requirement, employers must limit the number of employees and customers allowed inside their facilities at any one time, use visual markings and signage, limit the number of entrances, and establish specialized hours. Employers are also required to post the Executive Order at each entrance and publish the order to “members of the public at large by all reasonable means available.” The Order offers no guidance on how employers can comply with the latter requirement if they are not a public entity with the ability to send an email, alert, or some other form of electronic communication to the general public.

The California Department of Fair Employment and Housing Issues COVID-19 Guidance

As California cases of COVID-19 began to rise in early March, several California administrative agencies released information on COVID-19 employment issues, such as administration of paid sick leave, disability benefits, and unemployment insurance. Yet, the Department of Fair Employment and Housing (DFEH)—the agency charged with enforcement of California’s Fair Employment and Housing Act (FEHA), which, among other things, prohibits discrimination, harassment, and retaliation in the workplace—remained silent. Earlier this week, the DFEH released its own guidance in response to the COVID-19 pandemic. The DFEH’s guidance, styled in the form of Frequently Asked Questions, answers many questions that have arisen as COVID-19 workplace concerns have become ubiquitous, including whether employers may take employees’ temperatures, how much information an employer may reveal about employees who come in contact with the virus, how much employers may ask about an employee’s absence from work, and whether employers may require employees to wear personal protective equipment. The DFEH’s guidance confirms that an employee may use leave under the California Family Rights Act (CFRA) if the employee is ill with COVID-19 or is caring for a family member with COVID-19. The guidance also discusses whether employers should require medical documentation for leaves and accommodations for COVID-19 related disabilities given practical limitations on employees’ abilities to obtain medical documentation. Most of the DFEH’s guidance mirrors guidance previously issued by federal agencies. The U.S. Equal Employment Opportunity Commission (EEOC) previously released its own guidance for COVID-19 response in the workplace, including whether employers could perform employee temperature checks and how much information an employer could request from employees calling in sick. However, because the EEOC only administers federal law, before the DFEH issued its guidance, it was unclear whether the same direction would apply under California’s stricter FEHA.

Indiana Revises Law on Employment of Minors

The Indiana General Assembly has enacted changes in how and when minors are allowed to work in the state. The new provisions go into effect April 1, 2020.

A minor who is at least 14 years old and younger than 16 (14- and 15-year old employees) could not work before 7:00 a.m. or after 7:00 p.m. on a day that precedes a school day or after 10:00 p.m. on a day that does not precede a school day. In other words, a 14- or 15-year-old employee could not start work before 7:00 a.m. and could work only until 7:00 p.m., except for Friday and Saturday nights, when they could may work until 10:00 p.m.

Employees who are 16 years old could not work more than 8 hours per day, more than 30 hours per week, or more than 6 days per week. However, if the child’s parent gave written permission, the employee could work up to 40 hours during a school week, up to 9 hours per day, and 48 hours per week in a non-school week. These employees also could not begin any workday before 6:00 a.m., and they could work until 11:00 p.m. on a night that preceded a school day as long as the child’s parent gave written permission.

Employees who are 17 years old could not work for more than 8 hours per day, more than 30 hours per week, or more than 6 days per week. However, if the child’s parent gave written permission, the employee could work up to 40 hours during a school week, up to 9 hours per day, and 48 hours per week in a non-school week. These employees also could not start work before 6:00 a.m. if it was a school day. They were also permitted to work until 11:30 p.m. on nights that preceded a school day or until 1:00 a.m. with written permission from the minor’s parent.

With the goal of simplifying these rules, the Indiana General Assembly has amended the law to provide that employees aged 14 and 15 may not work before 7:00 a.m. or after 7:00 p.m. From June 1 through Labor Day, these employees may work as late as 9:00 p.m., except on a day that precedes a school day. On those days, they are allowed to work only until 7:00 p.m.

Employees who are aged 16 and 17 may not work more than 9 hours in a day, more than 40 hours in a school week, more than 48 hours in a non-school week, or more than 6 days per week. These employees may not start work before 6:00 a.m., but they may work until as late as 10:00 p.m. on a night that precedes a school day. This does not apply if the minor is working in an occupation deemed by the Commissioner of Labor to be: “(1) dangerous to life or limb; or (2) injurious to health or morals.” If a parent gives written permission, these employees may work until 11:00 p.m. on a night that precedes a school day. This written permission must be kept on file by the employer.

One rule regarding hours of employment has stayed the same: employees under the age of 18 may not work after 10:00 p.m. or before 6:00 a.m. in an establishment that is open to the public after 10:00 p.m. or before 6:00 a.m., unless another employee, who is at least 18 years old, also works with the minor.

The new law also removes several key provisions regarding the employment of minors. Employers are no longer required to provide additional rest breaks for an employee who is under 18. However, the law allows the Indiana Department of Labor to establish recommendations for rest breaks for minors.

Minors also are no longer required to present a written exception from their school allowing them to work between 7:30 a.m. and 3:30 p.m. on school days. However, employees who are under 16 may not be employed or permitted to work during school hours.

The new law also places additional requirements on employers. Significantly, an employer that employs at least 5 individuals 14 to 17 of age must register with the Department of Labor. The Department of Labor has until July 1, 2021, to develop a database that is open to the public, showing which businesses employ minors.

Additionally, employers are no longer allowed to pay minors below the federal minimum wage during the first 90 days of employment.

Court Cases

Ninth Circuit Holds That Background Check Disclosures Should Not Contain Any Extraneous Information

In March 2017, the plaintiff applied for a job with a supermarket. As part of the hiring process, the store presented the plaintiff with several disclosure and acknowledgement forms, including two documents concerning an investigation of his background. One of the documents was a “Disclosure Regarding Consumer Reports and Investigative Consumer Reports” (the disclosure), which advised the plaintiff of the store’s intent to order his background check. The second document was an “Authorization Regarding Consumer Reports and Investigative Consumer Reports,” which sought the plaintiff’s consent for the background check. A few weeks later, the store sent to the plaintiff a pre-adverse action notice, which included a copy of his background check report and advised him of, among other things, the right to dispute the accuracy or completeness of the report with the consumer reporting agency (“CRA”) that prepared the report. Nothing in the letter advised the plaintiff that he could discuss the report directly with the store. Five business days later, the CRA sent to the plaintiff an adverse action notice, which advised of the store’s decision not to continue his employment. The plaintiff filed a putative class action alleging the store violated the FCRA by: (1) providing an unclear disclosure form with extraneous text and (2) failing to notify the plaintiff in the pre-adverse action notice that he could discuss the report directly with the store. The district court granted the store’s motion to dismiss both claims.

Disclosure Claim

The FCRA requires employers who obtain a background check report on a job applicant to first provide the applicant with a “clear and conspicuous disclosure” that the employee may obtain such a report. The Ninth Circuit previously held in Syed v. M-I, LLC, 853 F.3d 492 (9th Cir. 2017), that this language requires the disclosure to consist “solely” of the disclosure. In other words, according to Syed, the FCRA’s disclosure requirements do not allow for the inclusion of extraneous information in the disclosure, even if the information is related to the disclosure. It is against this backdrop that the Ninth Circuit in Walker v. Fred Meyer, Inc., No. 18-35592 (9th Cir. March 20, 2020), addressed “as a matter of first impression what qualifies as part of “the disclosure.

In reversing the district court’s dismissal of the disclosure claim, the Court rejected the employer’s argument that “some additional information” may be included in the disclosure so long as the information is “closely related” to the disclosure and “focuses the applicant’s attention on the FCRA disclosure rather than detracting from it.” In doing so, the Court noted that its recent decision in Gilberg v. Cal. Check Cashing Stores, LLC, had foreclosed the possibility of the inclusion of information that is simply “closely related” to the disclosure.

The Ninth Circuit concluded by making it clear that “a disclosure form violates the FCRA’s standalone requirement if it contains any extraneous information beyond the disclosure required by the FCRA.” It then addressed what qualifies as part of the disclosure, noting that beyond a plain statement disclosing “that a consumer report may be obtained for employment purposes,” some concise explanation of what the phrase means may be included. The Court provided examples of information that would further the purpose of the disclosure by helping the applicant understand the document, including that an employer “could briefly describe what a ‘consumer report’ entails, how it will be ‘obtained,’ and for which type of ‘employment purposes’ it may be used.” The Court rejected the plaintiff’s argument that the disclosure was not standalone because it referenced “investigative consumer reports,” concluding that such reports are “a subcategory or specific type of consumer report.” Thus, the Court reasoned, “[a]s long as the information about investigative reports is limited to disclosing that such reports may be obtained for employment purposes, and providing a very brief description of what that means,” the inclusion of such information in the disclosure “does not run afoul of the standalone requirement.”

The Court’s opinion is particularly instructive because it reviewed the text of the entire disclosure at issue to determine whether it contained extraneous information in violation of the FCRA. After quoting the disclosure in its entirety, the Court focused on the following text, which it found to be problematic and, thus, unlawful:

You may inspect [CRA’s] files about you (in person, by mail, or by phone) by providing identification to [CRA]. If you do, [CRA] 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 [CRA] obtains any information by interview, you have the right o obtain a complete and accurate disclosure of the scope and nature of the investigation performed.

While the Ninth Circuit recognized that these two paragraphs were a good faith effort to provide information that an applicant might find useful, it found the language “extraneous” because it might “pull[ ] the applicant’s attention away from his privacy rights protected by the FCRA by calling his attention to the rights” the applicant has to inspect the CRA’s files. Instead of including the two paragraphs in the disclosure, the Court said the employer should have provided the information in a separate document “because the information cannot reasonably be deemed part of a ‘disclosure … that a consumer report will be obtained for employment purposes.’” Because the district court did not address whether the text of the disclosure violated the FCRA’s requirement that the disclosure also be “clear and conspicuous,” the Court remanded that issue to the district court.

Pre-Adverse Action Claim
With respect to the plaintiff’s pre-adverse action notice claim, the Ninth Circuit affirmed dismissal, holding that the FCRA’s requirement that an applicant or employee be provided the right to dispute inaccurate information in a consumer report does not also require employers to provide applicants or employees with an opportunity to discuss their reports directly with the employer. Rather, according to the Court, the employer need only provide, in a pre-adverse action notice to the applicant or employee, a description of the individual’s right to dispute with the background check company the completeness or accuracy of any item of information in the applicant or employee’s file with the background check company. Having done that, the Court agreed that the employer complied with the FCRA’s pre-adverse action requirement.

Ninth Circuit Holds Employers May Provide a Standalone Background Check Disclosure Concurrently with Other Documents

On April 24, 2020, the Ninth Circuit held that the Fair Credit Reporting Act (FCRA) permits an employer to provide job applicants with a background check disclosure document at the same time the employer provides job applicants with other documents, so long as the background check disclosure is presented in a “standalone” document.1 In so holding, the Ninth Circuit declined to extend its prior trio of rulings (SyedGilberg and Walker) that adopted a formalistic interpretation of the FCRA’s standalone disclosure rule.

This is the Ninth Circuit’s fourth decision since 2017 regarding an employer’s obligation to disclose its intent to order a background report “in a document consisting solely of the disclosure,” commonly referred to as the “standalone” requirement. In its prior trio of decisions, the Ninth Circuit interpreted the barebones language in the FCRA – “a document consisting solely of the disclosure” – quite literally, reasoning that the word “solely” means “alone, singly” or “entirely, exclusively” so that “FCRA precludes the inclusion of any terms besides a disclosure and an exempted authorization.” In its latest decision, the Ninth Circuit rejected the plaintiff’s argument that a single-page, two-sentence document entitled “Fair Credit Reporting Act Disclosure Statement” was not “standalone” because the employer presented it contemporaneously with a separate multi-page document with notices, waivers, and agreements unrelated to the background check. The Ninth Circuit held that an employer may provide a standalone FCRA disclosure contemporaneously with other documents. The court held that the employer’s disclosure document satisfied the “standalone” requirement because that single-page document included nothing beyond disclosing an intent to obtain a background report, the employer’s logo, and a signature block.

Takeaways for Employers

The Ninth Circuit is the only federal appellate court to interpret the “standalone” disclosure requirement to date. Whether other courts will follow the Ninth Circuit’s hyper-technical reading of the statute remains to be seen. In the meantime, it is prudent for employers to continue to intensively scrutinize the text and presentation of the background check disclosure document to candidates in hard copy and electronic format. The number of class action lawsuits against employers continue to spike. Relatedly, employers should be mindful of compliance with the growing list of state and local laws that govern background check disclosures and inquiries into and the use of criminal history and credit history information.

Is the Government Immune from FCRA Suits?

As of 2018, the Department of Education had issued $1.5 trillion in student loans. As the United States’ top student-loan lender, it is one of the largest furnishers of credit data in the country. That’s right, the Government as a furnisher. Who would have thought? Does that mean a borrower can sue the Department of Education if it violates the Fair Credit Reporting Act (“FCRA”)? If the borrower lives in the Seventh Circuit, he or she can. Currently, there is a Circuit split on whether the general civil enforcement provisions of the FCRA, 15 U. S. C. §§1681n–1681o, waive the Federal Government’s sovereign immunity for FCRA civil enforcement suits. Just this week, in Anthony Robison v. Department of Education, 590 U.S. ___ (2020), the Supreme Court denied Mr. Robinson’s writ of certiorari, leaving the split, well split. This means borrowers in Seventh Circuit states have a cause of action against the Department of Education while borrowers with same types of loans in Ninth and Fourth Circuit states are barred from suit. At least for now.

But this was not a unanimous Supreme Court denial. Justice Thomas, with whom Justice Kavanaugh joined, dissented because they believed that the question concerned a “matter of great importance” that has divided the Circuits making it ripe for Supreme Court intervention. Their primary concern is the potential litigation exposure the Department of Education faces, where a “waiver of sovereign immunity would thus have a significant impact on the public fisc.” Id. at 4. In short, with trillions of dollars in loans, potential plaintiffs could riddle the department with time-consuming and costly litigation at a great expense to the American people.

So what is the split? The split turns on the definition of “person” under the FCRA and “whether the inclusion of ‘governmental . . . agency’ in the FCRA’s definition of ‘person’ constitutes an unequivocal waiver of the federal government’s immunity from money damages and subjects the United States to the various provisions directed at ‘any person’ who violates the law.” Daniel v. Nat’l Park Serv., 891 F.3d 762, 769 (9th Cir. 2018). The statute defines person as “any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity.” 15 U.S.C. §1681a(b)(emphasis added).

But even though “government” is plainly in the statutory definition of “person”, both the Fourth and Ninth Circuits held that the statute text is not “unambiguous and unequivocal” to amount to a waiver of sovereign immunity, especially when the statutory framework is considered as a whole. See Robinson v. United States Dep’t of Educ., 917 F.3d 799 (4th Cir. 2019); see also Daniel v. Nat’l Park Serv., 891 F.3d 762 (9th Cir. 2018).

On the other hand, the Seventh Circuit held that the government is a person within the plain reading of the statute and thereby sovereign immunity is waived because “[t]he United States is a government. One would suppose that the end of the inquiry. By authorizing monetary relief against every kind of government, the United States has waived its sovereign immunity. And so we conclude.” Bormes v. United States, 759 F.3d 793, 795 (7th Cir. 2014). And there you have it.

So, who is going to fix this? The Circuits or Congress – or maybe a very large judgment against

the Government that peaks the Supreme Court’s interest again. Indeed, the Supreme Court has found the government immune under other consumer privacy statutes like the TCPA. See, e.g., Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663, 672 (2016)(noting that “[t]he United States and its agencies, it is undisputed, are not subject to the TCPA’s prohibitions because no statute lifts their immunity”, but the immunity did not pass-through to the federal subcontractor in Cambell). So, no matter how this split is to be resolved, this is one to watch and we will keep you posted.

District Court Holds CRAs Not Obligated to Determine Legal Status of Debt

Earlier this month, in Davis v. Carrington Mortgage Services, LLC, et al., the United States District Court for the District of Nevada held that consumer reporting agencies are not obligated to determine the legal status of debts. The Court also reinforced the plausible pleading standard for Fair Credit Reporting Act cases, while providing an overview of CRAs’ obligations under the act. Plaintiff Cheryl Davis alleged that a national CRA violated sections 1681e and 1681i of the FCRA by reporting inaccurate credit information and failing to follow reasonable procedures to verify the accuracy of the information that it reported. Specifically, Davis claimed that following her discharge from Chapter 13 bankruptcy, the CRA inaccurately reported her mortgage account with a $0 balance and a notation that the account was discharged in bankruptcy. Davis claimed that this reporting was inaccurate, as the account was excepted from her discharge and she had continued to make timely payments. Davis claimed to have disputed the reporting by letter to the CRA, but alleged that the inaccurate reporting continued. Davis alleged that the “suppression of her positive payment history” caused her credit injuries, emotional harm, and actual damages. The CRA moved to dismiss the complaint, arguing that Davis lacked standing and had failed to state a claim under the FCRA. The Court quickly rejected the CRA’s argument that Davis’s “broad generalizations” regarding the impact of lower FICO scores on lending decisions did not support a concrete and particularized injury. Instead, the Court found that Davis plausibly alleged that the reporting could have resulted in less favorable refinance terms. Accordingly, the Court held that Davis had Article III standing.

Next, the Court summarized what a plaintiff must plausibly allege to support a claim under sections 1681e and 1681i of the FCRA, including the threshold requirement under both sections – that a consumer first make a prima facie showing of inaccurate reporting. The Court explained that “[r]eporting can be inaccurate if it is patently incorrect or ‘misleading in such a way and to such an extent that it can be expected to adversely affect credit decisions.’” Furthermore, to state a claim under Section 1681e(b), a plaintiff also is required to plausibly allege that the CRA failed to follow reasonable procedures in obtaining a plaintiff’s credit information. To state a claim under Section 1681i(a), a plaintiff must plausibly show: (1) plaintiff “notified the CRA of the inaccuracy;” (2) “the dispute was not frivolous or irrelevant;” (3) “the CRA failed to respond to the dispute;” and (4) the “failure caused plaintiff to suffer actual damages.” The Court found that Davis’s claims failed, as she did not plausibly allege that the CRA’s procedures were unreasonable. In the dispute letter before the Court, Davis asked only that the CRA include her positive payment information on her credit report. In response, the CRA obtained verification from Davis’s mortgage company verifying that the account was included in her bankruptcy. Subsequently, the CRA continued to report the purportedly inaccurate information – that Davis’s mortgage account was included in her Chapter 13 discharge.

Accordingly, the Court held that the CRA was not obligated to reinvestigate the accuracy of whether Davis’s mortgage account was discharged in bankruptcy, as “CRAs are neither qualified nor obligated to determine the legal status of a plaintiff’s debt.” Further, the Court held that it was reasonable for the CRA to report the mortgage as included in bankruptcy when “there is a bankruptcy on record and no contrary information to indicate that her account was excepted from discharge.” While decided based on Davis’s failure to plausibly state a claim, this decision demonstrates a continuing trend of courts shielding CRAs from liability under the FCRA when faced with determining the legal status of a consumer’s debt obligation.

Other Developments

EEOC Issues Technical Assistance on COVID-19 Workplace Issues

The Equal Employment Opportunity Commission (EEOC) has issued updated technical assistance to help employers address a number of workplace issues relating to COVID-19, and to reconcile guidance from the Center for Disease Control (CDC) and state and local public health authorities with employer obligations under EEO laws. Here are the key highlights.

COVID-19 Pandemic Medical Inquiries and Exams

Consistent with recommendations from the CDC about how to avoid further spread of the disease, the updated guidance clarifies that employers have discretion to inquire about COVID-19-related medical conditions and to take steps that ordinarily would not be allowed.

Specifically, employers may now:

  • Ask employees who call in sick if they are experiencing symptoms identified as associated with COVID-19 by the CDC, other reputable medical sources;
  • Take the temperatures of employees (e.g., at the beginning of each workday or shift);
  • Require employees who are experiencing COVID-19 symptoms to leave the workplace; or
  • Require a doctor’s note certifying fitness for duty after an employee returns to work after exhibiting COVID-19 symptoms. Other types of certifications may also suffice (e.g., a form or email certifying that the individual does not have COVID-19.)

Employers that collect and retain medical information related to COVID-19 must maintain that the information is in compliance with the ADA (in a medical file, stored separately from an employer’s personnel file).

Reasonable Accommodation

Employers are reminded that low-cost solutions are often available to provide protection against exposure to COVID-19 in the workplace, especially for employees with pre-existing conditions that may put them at higher risk from COVID-19. Among other things, employers should consider designating one-way aisles in stores or facilities, or using plexiglass, tables, or other barriers to ensure minimum distances between customers and coworkers whenever feasible.

Employers should consider accommodations such as a temporary job restructuring, temporary transfer to a different position, or work schedule modification.

Other advice includes:

  • In the event of urgent requests for accommodation or limited time to explore requests for accommodation, employers may choose to forego or shorten the interactive process by granting a temporary or interim accommodation and set an end date at which time the accommodation can be re-evaluated.
  • To prepare for future accommodations, employers may ask employees with disabilities to request accommodations and begin the interactive process for accommodations that employees believe they may need when the workplace re-opens.
  • In deciding whether a particular accommodation amounts an “undue hardship,” the sudden loss of income stream because of the pandemic is appropriate. But employers cannot simply reject accommodations because they will result in some costs; the employer must still weigh costs against capabilities and work with the employee to explore alternatives.

The guidance recommends proactive measures to prevent discrimination and harassment, starting with explicit communication to the workforce that fear of the pandemic should not be misdirected toward individuals on the basis of national origin, race, or other prohibited basis. The guidance also directs employers to its anti-harassment policy tips and guides on harassment prevention.

The guidance provides no specific guidance regarding COVID-19-related furloughs and layoffs, but reminds employers that special rules apply when offering employee severance packages in exchange for a general release of all discrimination claims and provides a link to other EEOC technical assistance guidance.

As government stay-at-homes orders are lifted, the guidance reaffirms that the ADA permits employers to make disability-related inquiries and conduct medical exams if job-related and consistent with business necessity. Inquiries and reliable medical exams meet this standard if they are necessary to exclude employees with a medical condition that would pose a direct threat to health or safety.

Because guidance from the CDC and public health authorities has deemed COVID-19 a direct threat to health and safety, employers act consistently with the ADA as long as any screening implemented is consistent with advice from the CDC and public health authorities for that type of workplace at that time and they do not engage in unlawful disparate treatment based on any protected characteristic.

While the EEOC’s guidance reminds employers that all of the EEO laws it enforces remain in effect during the COVID-19 pandemic, it also emphasizes that those laws do not interfere with or prevent employers from following guidelines made by the CDC or state and local public health authorities regarding COVID-19. Because its guidance permits employers increased discretion and flexibility to respond to the pandemic crisis and maintain workplace safety, it is critical that employers remain up to date on all EEOC updates to ensure they are meeting their obligations under rapidly changing conditions.

This information has been prepared by Validity Screening Solutions for informational purposes only and is not legal advice. The content is intended for general information purposes only, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have.