Federal Fair Credit Reporting Act Disclosures Cannot Be Combined With Similar State Law Disclosures

By Emily J. Fox and Mark A. Rein, Wilson Turner Kosmo

The federal Fair Credit Reporting Act (FCRA) requires employers who obtain a consumer report on a job applicant to first provide the applicant with a “clear and conspicuous” disclosure that they may obtain such a report, “in a document that consists solely of the disclosure.”  Several states have similar laws with similar disclosure requirements, such as California’s Investigative Consumer Reporting Agencies Act (ICRAA).  Despite the similarity and overlap in these laws, employers who combine federal and state disclosures into a single document will find themselves in violation of both statutes.

In Gilberg v. California Check Cashing Stores, LLC (9th Cir. 2019) 913 F.3d 1169, the Ninth Circuit addressed the emlpoyer’s practice of providing applicants with a “Disclosure Regarding Background Investigation” form that contained not only a FCRA disclosure, but also a variety of other state mandated disclosures—including for applicants in New York, Main, Oregon, Washington, California, Minnesota, and Oklahoma.  The court held the disclosure violated both the FCRA and the ICRAA because the disclosure requirements in each statute mean what they say: each disclosure must be in a document that consists “solely” of the disclosure.  The court rejected the employer’s argument that the state-mandated disclosure information actually furthered FCRA’s purpose because “purpose does not override plain meaning.”  Accordingly, the court held that neither the FCRA nor the ICRAA permit employers to combine their respective disclosures together, regardless of how “closely related” they may seem.

The Ninth Circuit also provided definitions for the terms “clear” and “conspicuous” for purposes of the FCRA and ICRAA.  The court held that “clear” means “readily understandable,” and “conspicuous” means “readily noticeable to the consumer.”  Applying these definitions, the court held that the employer’s disclosure was conspicuous, but not clear.  The court noted the headings on the disclosure were capitalized, bolded, and underlined—even though the font on the front was “inadvisably” small and cramped.  However, the court held that the combination of the state and federal disclosures was confusing, as were other portions of the disclosure that were the result of poor draftsmanship—including incomplete sentences that lacked a subject.

California employers should make sure to provide applicants with two separate disclosures: one for the FCRA and one for the ICRAA.  Employers operating in multiple states should consider separate disclosures for each state.  Finally, employers should also make sure that each disclosure is clearly captioned and free from typos and other confusing language.

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