On June 21, 2018, the U.S. District Court for the District of Oregon dismissed a putative class action complaint alleging that a potential employer violated the disclosure and pre-adverse action notification requirements of the Fair Credit Reporting Act in Walker v. Fred Meyer Inc. The Walker decision highlights several key lessons associated with FCRA class actions, particularly related to the disclosures employers must provide to prospective employees.
Daniel Walker applied for a job with Fred Meyer Inc. As part of the application process, Fred Meyer provided Walker with separate disclosure and authorization forms regarding its intent to procure a background report on Walker. Fred Meyer presented the disclosure and authorization forms together, each in separate documents. The disclosure form mentioned both a general consumer report and an investigative consumer report.
Fred Meyer then obtained a background report from a background screening company that contained negative information about Walker. Fred Meyer provided a pre-adverse action notice to Walker, explaining that he could contact the background screening company with issues regarding the report. The notice did not inform Walker that he could contact Fred Meyer directly to discuss any issues.
The Court’s Ruling
The court’s well-reasoned opinion rejected each of Walker’s arguments and claims.
First, Walker claimed the disclosure and authorization forms violated § 1681b(b)(2)(A)(i) of the FCRA, which requires an employer who procures a consumer report for employment purposes to provide a “clear and conspicuous disclosure … in writing … in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes.” Specifically, Walker claimed the reference to two types of reports (a general consumer report and an investigative consumer report) in the disclosure was a violation of the FCRA. Fred Meyer’s disclosure mentioned both reports in the same, initial disclosure without explicitly distinguishing between the two. The disclosure then set out a consumer report disclosure and did not mention a potential investigative report until the final paragraph, which stated “[i]f [the background screening company] obtains any information by interview, you have the right to obtain a complete and accurate disclosure of the scope and nature of the investigation performed.” The court rejected Walker’s challenge finding that the last sentence “in fact emphasizes to the reader that this disclosure is not in itself an investigative report disclosure.”
Similarly, the court denied Walker’s claim that by presenting the authorization form with the disclosure, the document did not consist “solely of the disclosure” and it was “riddled with extraneous information.” In doing so, the court differentiated between the requirements for the authorization and the disclosure, noting the statute does not require the authorization to consist “solely” of the authorization. Likewise, based on a review of the documents, the court found no basis to read the documents together as part of the job application, as Walker had argued. Instead, the court found presenting the disclosure as a separate document along with the authorization “did not destroy the stand-alone character of the disclosure.”
Walker’s claim that the pre-adverse action notice violated § 1681b(b)(3) of the FCRA did not fare any better. That provision requires an employer, before using a consumer report to take adverse employment action, provide “to the consumer to whom the report relates” both a copy of the report and “a description in writing of the rights of the consumer under this subchapter …” By only directing him to contact the background screening company, and not Fred Meyer, Walker alleged this notice failed to meet the requirements of the FCRA. But, the court rejected this claim on the merits. The court found no support suggesting Fred Meyer’s notice violated the FCRA because it did not inform Walker he could contact Fred Meyer directly, or the date by which he must do so. The court held that nothing in the FCRA or the supporting case law requires the pre-adverse action notice to inform the job applicant that he can contact the employer directly.
The Walker opinion highlights the importance of carefully following the technical requirements of the FCRA when obtaining a background report on prospective employees. Fred Meyer defeated Walker’s claim because it provided disclosure and authorization notices in separate documents, apart from a job application or employee manual. Employers should be careful to provide FCRA notices in documents wholly separate from the job application.
Fred Meyer also succeeded because its disclosure distinguished between general consumer reports and investigative reports. Companies should carefully consider the language and form of their disclosures. Any potential ambiguity could give rise to a challenge, even if eventually unsuccessful.
Finally, employers and background screeners who send pre-adverse action notices must carefully comply with the requirements of the FCRA. Because the pre-adverse action notice clearly informed Walker of his rights, his claim failed. These notices should include instructions on who and how to contact to discuss the report. Moreover, the employer must provide sufficient time to dispute the report before taking a final adverse action.
Given the uncapped potential liability, the FCRA remains an attractive target for plaintiffs. The Walker decision provides a helpful reminder of primary attack points and the need to parse the FCRA’s technical requirements to assure compliance.
First published on Law360