Ninth Circuit: FCRA Background Check Disclosure Cannot Include Liability Waiver

Executive Summary: In a case of first impression, the Ninth Circuit Court of Appeals recently held that a background check disclosure that included a liability waiver violated the Fair Credit Reporting Act (FCRA). The Ninth Circuit is the first federal appeals court to decide this issue and definitively stated that the statute "unambiguously bars the inclusion of a liability waiver."

Under the FCRA, an employer cannot procure a "consumer report" (e.g. a background report, credit report, etc.) on an employee or applicant without providing a clear and conspicuous disclosure in a document that consists solely of the disclosure. The statute does not define the term "solely" but provides an exception from this requirement for an authorization to procure the report. Much of the recent FCRA litigation has involved whether employers' disclosure forms improperly included a release of liability or other "extraneous information" that rendered the disclosure invalid.