Despite its somewhat misleading title, The Fair Credit Reporting Act (FCRA) applies to criminal background checks. The FCRA provides for a specific disclosure process when any background check (credit or criminal) is used in the employment process: namely, to obtain a background check for employment purposes, the employer must provide an applicant with a "clear and conspicuous disclosure," found "in a document that consists solely of the disclosure [] that a consumer report may be obtained for employment purposes." See 15 U.S.C. § 1681b(b)(2)(A)(i) (emphasis added).

In other words, the statute requires a disclosure in a completely standalone document. Despite that clear language, many employers provide disclosures along with other information, such as waivers. That practices exposes those employers to significant liability.

A Cautionary Tale: Singleton v. Domino's Pizza

The recent decision of Singleton v. Domino's Pizza, LLC, Civil Action No. DKC 11-1823, 2012 WL 245965 (D. Md. Jan. 25, 2012) highlights the danger for employers of not complying with the letter of the FCRA. Several delivery drivers filed a putative class action against Domino's in federal court in Maryland. The case presented a number of issues, including whether Domino's disclosure form complied with the FCRA despite also including a liability release.

The court denied Domino's motion to dismiss, focusing on the FCRA's plain language requiring an employer to provide an applicant with a "document that consists solely of the disclosure." The court looked to dictionary definitions of the word "solely," which the court reasoned were clear and sufficient to defeat Domino's argument that the FCRA was ambiguous as to whether an employer's disclosure may include a liability release, as was Domino's practice. As the court explained, "by containing a liability release, [Domino's] form includes information that extends beyond the disclosure itself." The court therefore concluded that the plaintiffs had alleged sufficient facts to survive a motion to dismiss.

The court also rejected Domino's argument that the court should conclude as a matter of law that even if Domino's had violated the FCRA by including the liability release in its disclosure, that such violation was not willful. Domino's relied on the Supreme Court's decision in Safeco Ins. Co. v. Burr, 551 U.S. 47 (2007), which held that a plaintiff cannot establish that a defendant willfully violated the FCRA unless the defendant's interpretation of an unclear statute is objectively unreasonable. In support of its motion to dismiss, Domino's argued that its interpretation of the FCRA's disclosure statute fell within Safeco's ambit because the statute was unclear and Domino's interpretation was not objectively unreasonable. The court disagreed, however, pointing out that the statute was not unclear because the meaning of "solely" was plain on its face. As the court explained, "[b]ecause the plain language of § 1681b(b)(2) indicates that inclusion of a liability release in a disclosure form violates the FCRA's disclosure and authorization requirements, Domino's fails to show that its interpretation of this section was 'not objectively unreasonable.'" Furthermore, the Federal Trade Commission had issued advisory letters providing persuasive authority that Domino's practice of including more information on its form than "solely" the FCRA-mandated disclosure violated the act.

Conclusion

The FCRA requires an employer to disclose in advance in a standalone document consisting solely of the disclosure that the employer intends to obtain a background check. Failing to strictly follow the letter of the FCRA invites a conclusion that the employer willfully violated the FCRA, which exposes an employer to substantial liability, including statutory damages of between $100 to $1,000 per violation.

Although the FCRA does allow an employer to combine the disclosure with the consumer's authorization for the employer to obtain the background check, that does not give the employer permission to include anything other than the authorization in the disclosure document. Therefore, the best practice is to separate these documents and include anything other than the disclosure itself in a separate authorization form.