Within the past year, one Wisconsin resident has filed several class-action lawsuits against Wisconsin employers. In each case, the resident claimed that the targeted employers were using improper disclosures in employment applications for purposes of obtaining background information, like consumer and credit reports. The Fair Credit Reporting Act, 15 U.S.C. §§ 1681, et seq., prohibits persons from procuring a consumer report for employment purposes unless it provides the applicant with a clear and conspicuous disclosure in a document that consists solely of that disclosure. The only other statement that is permitted in the document containing the disclosure is one in which the consumer authorizes the procurement of the report.
Two recent federal court decisions in the cases filed by the Wisconsin resident highlight the importance of this issue. See Groshek v. Great Lakes Higher Education Corp., No. 15-cv-143 (W.D. Wis. filed Nov. 16, 2015); Groshek v. Time Warner Cable, Inc., No. 15-cv-157 (E.D. Wis. filed July 31, 2015). In both cases, the plaintiff applied for employment with the respective employer and was asked to provide his consent on background disclosure and authorization forms, each of which included a liability release. In Time Warner Cable, the plaintiff was required to complete three separate consent forms, all of which also included the following statement: “I hereby release from liability all persons and organizations furnishing references or other information.” In Great Lakes, the plaintiff completed a form authorizing the employer to conduct a background check and to procure his credit report. The document that he signed also contained the following statement: “I release all parties from all liability for any damage that may result from furnishing information, including providing my birthday to ... [a third-party consumer reporting agency] if requested, and this authorization to Great Lakes and ... [a third-party consumer reporting agency].”
In each case, the plaintiff filed a class-action lawsuit against the employer in Wisconsin federal court (in the Eastern and Western Districts, respectively) on the grounds that the employers had violated the FCRA by not providing a proper disclosure (i.e., the document bearing the written disclosure did not consist solely of the disclosure). In both cases, the defendants moved to dismiss the complaint; yet, the district court judges in each case concluded that including a liability release on the same document as the disclosure was a violation of the express language of the FCRA. Both courts noted that the FCRA, by its terms, requires that the clear and conspicuous disclosure appear by itself on the document, with the only exception being the consumer’s authorization for the report.
Courts in other states have concluded that the inclusion of other, seemingly appropriate information can trigger a FCRA violation. For example, many employment applications include state-specific legal notices regarding obtaining a consumer report. State courts outside of Wisconsin have held that the inclusion of such notices on the same document as a FCRA disclosure constitutes a FCRA violation.
So, what is an employer to do? All Wisconsin employers are encouraged to review their employment applications with regard to such disclosures. We recommend that employers use a single-page, written disclosure regarding the consumer report and be certain that the consumer’s authorization is the only other piece of information that appears on that page. Any other information that the employer may wish to communicate with an applicant should appear on an entirely separate page. The employer should require applicants to sign the separate disclosure page, as well as any additional pages containing other information. The employer should maintain records of all signed pages for every applicant for at least a period of one year.
In the meantime, Wisconsin employers must be careful. There is at least one known Wisconsin resident who appears to be completing employment applications simply to bring FCRA lawsuits against unsuspecting employers. Do not risk a class-action lawsuit; review your employment application today.