Employment decisions are decisions related to the employment of employees or applicants for employment. They can include decisions about hiring, promoting, reassigning, evaluating, disciplining, terminating, or setting of salary of an employee, as well as decisions about training, working hours, terms and conditions of service, and separation of employees. Employment decisions can have legal implications and should be based on objective criteria and performance appraisals.

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Almost everyone has heard the terms DWI and DUI, and many think that both are interchangeable. New York law uses a third term – DWAI. None of these terms are interchangeable, and New York law does not use the term DUI or driving under the influence.

In New York, there are two main “drunk driving offenses” – DWI and DWAI. DWI stands for “driving while intoxicated,” while DWAI stands for “driving while ability impaired.” A DWI means that the driver is legally intoxicated, with a blood alcohol content of at least 0.08 percent. A DWAI involving alcohol means the driver’s blood alcohol content is between 0.05 and 0.07 percent.

Although the penalties for a New York DWI and DWAI are nearly the same, there is a big difference between them regarding the offense level. A DWI conviction is a criminal offense, while a DWAI conviction is a violation – which in New York is a non-criminal offense.

The practical effect of this distinction is that a DWAI conviction will appear on a New York driving record (usually stated as “driving while impaired”), but the court conviction will not appear on a New York Statewide CHRS report because these reports do not include non-criminal offenses such as violations.

A basic principle of conducting international searches on an individual is that you need a lawful basis for processing personal data. This principle applies to both employment-purpose and commercial background checks.

Although the number and type of lawful bases vary from one country to another (especially with the enactment of new data protection and privacy laws in many countries over the last several years), a lawful basis for processing personal data common to all international searches is the consent of the individual search subject. From a compliance perspective, obtaining an individual’s consent for the searches is the best practice.

Other than the requirements that the subject’s express consent be unambiguous and freely given, there is no universally prescribed format or wording for an international consent form.

If the subject’s consent cannot be obtained, you can look to a country’s data protection and privacy laws to determine if a different legal basis may be applicable for processing personal data that does not require the subject’s consent. It is always up to the controller of the data to determine the appropriate legal basis for processing personal data.

For individuals located in the EU or UK, there are several legal bases that will satisfy the compliance requirements under the EU GDPR, the UK GDPR and the Data Protection Act of 2018 (UK) if consent cannot be obtained. The controller can still request these searches if it has a legitimate interest in obtaining the individual’s personal data or needs the data to perform a contract.

If the request for the searches is based on a legitimate interest or performance of a contract, the individual must receive a notice of the controller’s intention to process the data. Notice can be given in several different ways, including directly to the individual, in an engagement letter or similar document, or by publication on the client’s website. The way the controller gives notice is their decision. 

Although several states have laws analogous to the federal Fair Credit Reporting Act (FCRA), the District of Columbia does not. As a rule, the District of Columbia follows the federal FCRA regarding the limitations on reporting negative information in background check reports used for employment purposes. However, there are three notable exceptions where district law differs from the FCRA regarding reporting criminal records:

(1)        Records of arrests or criminal accusations that did not result in a conviction cannot be reported (unless the charges are pending);

(2)        Inquiries about criminal convictions cannot be made unless a conditional offer of employment is made; and

(3)        Convictions with a completed sentence that is more than 10 years old cannot be reported.

The first two exceptions are found in the district’s Fair Criminal Record Screening Amendment Act of 2014 codified at Sections 32-1341 – 32-1346 of the Code of District of Columbia, and the third exception is found in Section 2–1402.66 of the district’s Human Rights Law.

The NY FCRA sets forth notice and authorization requirements for investigative consumer reports as shown in “https://law.justia.com/codes/new-york/2017/gbs/article-25/380-c/” NY Gen Bus L § 380-C. However, this section is silent on the issue of employee misconduct investigations and we found no  language in NY FCRA law that is analogous to the federal FCRA exemption for employee misconduct investigations as provided in 15 U.S.C.1681a(y)(1).

When analyzing this question, we reviewed a 2006 opinion by the Oklahoma Attorney General that addressed a very similar issue. A state senator wanted to know whether OK employers could rely on the FACTA amendment to the federal FCRA that provides the exemption for employee misconduct investigations and dispense with the OK notice requirements for consumer reports. The OK AG said “no,” the reason being that the OK statute (which specifically references the previously enacted federal FCRA) was enacted before FACTA and the OK legislature did not indicate in the statute that amendments to the original FCRA would also be adopted.

Of course, the AG opinion is not a binding law anywhere, including in OK. But it does show how the issue may be analyzed to the detriment of the employer if it arose in litigation. Like the OK statute, the NY FCRA was enacted well before the FACTA amendment in 2003 (NY FCRA was enacted in 1977). However, unlike the OK statute, the NY FCRA does not include any references to the federal FCRA and, therefore, does not rely on any of its language as originally enacted. That is a distinction that can undermine an OK AG-type analysis to the NY FCRA.

The most we can say is that the NY FCRA does not address employee misconduct investigations and that the federal FCRA does set forth an express exemption from its notice requirements for such investigations. Whether there is a conflict between the NY notice requirements (or any other state’s notice requirements) and the federal exemption for employee misconduct investigations remains to be seen and there are no court opinions addressing the issue.

In the absence of guidance from NY FCRA regarding employee misconduct investigations, the employer can follow the federal FCRA exemption for these investigations. It would be prudent for the employer to document the need for confidentiality of the investigation, specifying the reasons why alerting the employee would undermine the investigation.

Typically, an arrest record will show the date, arresting agency, and the subject’s name (and other identifiers such as DOB and address), without specifying the charge or charges. The reason for this is twofold: (1) until the district attorney (“DA”) files a criminal case, there are no charges; and (2) the charges filed by the DA may be different than the charges on which the arresting officer based the arrest. An “arrest” and “being charged with a crime” are different things (although obviously related).  An “arrest” means that a person is taken into custody because they have been accused either by a warrant or by probable cause of committing a crime. Once in custody, the prosecutor’s office will decide whether the person will be charged with a crime. The person will then be given a charging document (complaint or information) that will state what charges they are facing.

A record will never show that an arrest was “dropped.” At best, you can infer that no charges were filed after an arrest if there is no corresponding court case.

Previously, we emphasized the limitations that several states and the District of Columbia place on reporting criminal convictions even though a job applicant discloses the conviction during the application process. What about limitations on reporting disclosed criminal records that do not result a conviction? Criminal records of non-convictions include: 

  • Arrest record (no charges filed) 
  • Dismissed charges 
  • Not guilty verdicts 
  • Deferred prosecution (no plea entered, and charges dismissed if conditions met) 
  • Nolle prosequi or nolle prosse (not prosecuted) 

Although the federal Fair Credit Reporting Act (FCRA) permits convictions to be reported regardless of when the conviction occurred, the FCRA limits the time for reporting non-convictions. Records of non-convictions are reportable for seven years from the earliest file date for the record and can appear on a background report for seven years. After seven years, the record cannot be reported unless the candidate is or will be earning more than $75k annually.

The FCRA seven-year rule applies in all states except California, Kentucky, New York, and New Mexico. These states prohibit reporting any records non-convictions, regardless of date of the record. California, New York, and New Mexico provide an exception for records of pending criminal cases. 

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 writtenassessment 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.
    Under 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.

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, MDBuffalo, NYChicago, ILCook County, ILColumbia, MODistrict of ColumbiaGrand Rapids, MIKansas City, MOLos Angeles, CA; Montgomery County, MDNew York City, NY;  Philadelphia, PA; Portland, ORPrince George’s County, MDRochester, NYSaint 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 CaliforniaColoradoConnecticut, Hawaii, Illinois, Maryland, Nevada,OregonVermont, and Washington – as well as ChicagoDistrict of ColumbiaNew 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.

Below are some of the common issues and considerations for using social media information in employment decisions.

Illegal discrimination

According to a 2018 national survey conducted on behalf of CareerBuilder by Harris Poll, 70% of employers use social media to screen candidates before hiring. While they may not be searching for negative information, more than half of those surveyed (57%) said they have found something during their screenings that led them to not hire someone. If even a single, disgruntled job applicant sued claiming he/she was not hired because of the illegal consideration of information obtained from a social media site, it could cost the company hundreds of thousands of dollars in legal fees. Convincing a court that the information uncovered from the viewing of social media was not used in the hiring process is often an uphill battle. After all, why was the site accessed if there was no intent to use the information?

Both the federal Civil Rights Act and state statutes prohibit discriminating against an applicant or employee because of a protected characteristic, such as race, religion, ethnic origin, disability and, increasingly, gender identification or sexual preference. For most jobs, this information is intentionally omitted from the employment application process in order to avoid legal problems. But if an employer or its agents want to find out such information, it is often readily available from a candidate’s Facebook page or LinkedIn profile. Of course, users may omit this information from their social media accounts or restrict access, but many do not— especially since they assume it will be accessed only by their friends or close associates.

The case of C. Martin Gaskell v. Univ. of Kentucky (2010 WL 4867630 E.D Ky. 2010) is an example of what can happen when an employer uses information gathered from social media as part of the hiring process. Dr. Gaskell was an astronomer who applied for a job as the director of the observatory at the University of Kentucky. During the job interview, the chairman of the Physics and Astronomy Department stated that he had researched Dr. Gaskell’s religious beliefs (online), and that they might be unacceptable to the dean of the department. The information he obtained showed that Dr. Gaskell was an outspoken critic of evolution and a believer of the intelligent design viewpoint. After someone who believed in evolution was hired for the position, Dr. Gaskell sued the university, claiming that its conduct violated his rights under the Civil Rights Act. Specifically, he alleged that the University discriminated against him based on his religious beliefs. During the discovery process, it was learned that an employee within the department sent an email to the chairman regarding an Internet search

that she conducted on Dr. Gaskell. In the email, she discussed the professor’s anti-evolution religious beliefs and indicated it was not a positive attribute. The court agreed that this information provided Dr. Gaskell with enough evidence to pursue a lawsuit to determine whether his religious beliefs uncovered in the Internet search were, in fact, illegally used to deny him the position sought. The case was ultimately settled for $125,000 before trial.

A discrimination trap that perhaps is frequently overlooked falls under the Americans with Disabilities Act (“ADA”) and may happen when an adverse decision is based on photos  or other postings showing a job candidate drinking or abusing drugs. Surveys show that adverse decisions after viewing such content often involve a reasoning that the individual “used bad judgment” but ADA provisions, as they relate to substance abuse, pose a discrimination risk as “addiction to a drug that has been prescribed, or alcohol abuse problems put the candidate in a protected disability class.”

Another risk exists in the form of disparate impact claims, which can arise if it turns out that an employer has been systematically refusing to hire applicants with a particular protected characteristic. Even if no disparate impact occurred because an employer viewed social networking profiles, disparate impact can result if the company tends to hire people who have social networking profiles rather than those who don’t. It is a generality, but this could occur because younger, more Internet-savvy and more affluent people tend to use social networking more than others.

EEOC consequences

In addition to potential lawsuits from individuals, an area of legal concern is the consequence  of running afoul of the Equal Employment Opportunity Commission (EEOC). The EEOC has become very active in scrutinizing employers’ hiring practices and in filing cases against them when it determines an employer’s hiring practices improperly include the use of social media.

NLRB issues

Whereas the EEOC is tasked with examining companies’ hiring practices, the National Labor Relations Board (NLRB) is the agency that enforces the National Labor Relations Act, which protects union-related activities. Although the NLRB has interpreted the Act as allowing the researching of candidates through social media, it cautions employers that doing so may pose a significant legal risk. It warns that if an unsuccessful job applicant can establish that a prospective employer had knowledge of his/her protected activity through the viewing of social media, the prospective employer may face liability if the applicant alleges he/she was denied employment because of it. An employer may be found legally liable unless it can show that it would not have hired the applicant regardless of its knowledge of the activity. Even if the individual making hiring decisions is not the one who reviewed a candidate’s social media activity, the employer may still be subject to liability since the NLRB has a liberal standard for “imputed knowledge.”

Off-duty conduct statutory restrictions

Several states have enacted legislation to protect employees’ conduct outside of the workplace. Generally, these statutes restrict an employer’s ability to discipline employees for engaging in legal activities while not at work.

In the social media context, in New York for example, the off-duty conduct statute restricts employers’ ability to take adverse action (including hiring, pay, workplace conditions, and termination) against employees engaged in recreational activities. In California, the Dept. of Industrial Relations has interpreted Labor Code § 96(k) which prohibits employers from taking adverse action due to an employee’s lawful conduct outside of work, to apply to decisions not to hire, even though the statute does not explicitly refer to hiring.

FCRA requirements

Under the FCRA § 607(b), consumer reporting agencies (CRAs) are required to exercise “reasonable procedures to assure maximum possible accuracy” of the information. Since the information on social media sites is self-reported and can be changed at any time, it is often difficult to ascertain that the information is accurate, authentic and belongs to the subject. Online identity theft is not uncommon, as are postings under another person’s name for purposes such as “cyber–slamming” (which refers to online defamation, slander, bullying, harassment, etc.) There is also evidence that some applicants try to game the hiring process by creating fake profiles of other potential applicants whom they view as competition for jobs.

Terms of use limitations

While certain social media sites have stricter privacy controls than others, many limit the use of their content. The terms of use agreements typically state that the information is for “personal use only” and not for “commercial” purposes. Although the definition of “commercial” in connection with employment purposes is interpretive, many legal experts say that employment screening fits that scope.

Privacy rights

Most states permit common-law claims for invasion of privacy, and some states, such as California, also provide constitutional privacy rights that may apply to private-sector employers.

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.