California Strictly Enforces the FCRA Standalone Disclosure Requirement

The Fair Credit Reporting Act (“FRCA”) requires employers to provide a standalone disclosure to job applicants of its intention to procure the applicant’s consumer credit report, and obtain the applicant’s consent to do so. On May 12, 2022, the California Court of Appeal found that the standalone disclosure requirement was willfully violated by an employer due to the inclusion of extraneous language unrelated to the topic of consumer reports (see Herbert v. Barnes & Noble, Inc., 4DCA/1, 2022 DJDAR p. 4823).

In Herbert, Barnes & Noble was granted summary judgment by the trial court based on its argument that the standalone disclosure violation was not willful. Rather, it argued that the extraneous language included in the disclosure was the result of an inadvertent drafting error, and it reasonably relied on the advice of outside legal counsel when it included the extraneous language. The Court of Appeal reversed and remanded, finding that there was a triable issue of material fact as to whether Barnes & Noble willfully violated the FCRA.

In a prior case, the Ninth Circuit held that the FCRA clearly and unambiguously prohibits a prospective employer from including terms on a disclosure form in addition to those mandated by FCRA (Syed v. M-I, LLC (9th Cir. 2017) 853 F.3d 492, 503-505). In light of the unambiguous nature of the statutory prohibition, the Syed court concluded “a prospective employer’s violation of the FCRA is ‘willful’ when the employer includes terms in addition to the disclosure ….” (Id. at p. 496; id. at p. 505 fn. 7). Based on that authority, Barnes & Noble’s inclusion of extraneous language on its disclosure form was indicative of willfulness.

Furthermore, at least one of Barnes & Noble’s employees was aware that the extraneous language would be included in the disclosure form, and that version of the form was used for nearly two years before the violation was discovered. Barnes & Noble’s asserted reliance on the advice of counsel was not found to be a complete defense and it did not preclude a finding of willfulness as a matter of law.

Thus, California employers must not include any extraneous language unrelated to the topic of consumer reports in its FCRA standalone disclosure to job applicants. The disclosure form should be subjected to a rigorous in-house review and approval process, in addition to approval by outside legal counsel. Otherwise, any violation of the disclosure requirement may be found to be willful.