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February 2019

Background Investigations: Employers Must Provide FRCA and ICRAA Disclosures Separately and without any “Extraneous Information”

The disclosures to job applicants required prior to obtaining a background investigation under the Fair Credit Reporting Act (“FRCA”) and the California Investigative Consumer Reporting Agencies Act (“ICRAA”) must each be on a separate document that contains no other “extraneous information,” the Ninth Circuit recently determined in the case Gilberg v California Check Cashing Stores, LLC, No. 17-16263, 2019 U.S. App. LEXIS 2940 (9th Cir. January 29, 2019).

The FRCA and the ICRAA contain identical language requiring employers to provide a job applicant with a written “clear and conspicuous disclosure” that the employer may obtain the applicant’s criminal background and other relevant information.  This disclosure must be contained in a “document that consists solely of the disclosure.”  15 U.S.C. § 1681b(b)(2)(A)(i); Cal. Civ. Code §§ 1785.20(5)(a), 1786.16(a)(2)(B).   

1. A Separate Document is Required for each Disclosure

In Gilberg, the Ninth Circuit determined that the FRCA and ICRAA’s language requiring the disclosure in a “document that consists solely of the disclosure” requires separate, standalone, documents for each statute’s disclosure and that these separate documents must not contain any “extraneous” information. 

In Gilberg, the employer had the plaintiff sign a one-page form titled “Disclosure Regarding Background Investigation” prior to obtaining her criminal background report.  The employer’s form in Gilberg included the FRCA and ICRAA disclosures on a single document as well as disclosures under New York, Maine, Oregon, Washington, Minnesota, Oklahoma, and California consumer reporting laws.  The Ninth Circuit determined that the inclusion even of this “closely related” information about other, similar, statutes violated the FRCA and ICRAA’s clear statutory language requiring a “separate document” containing only each law’s disclosures.

In reaching it ruling, the Ninth Circuit extended its previous holding in Syed v. M-1, LLC, 853 F.3d 492, 496 (9th Cir. 2017).  In Syed, the Court has previously stated that an FRCA disclosure could not be contained in the same document as a liability waiver.  However, in Gilberg, the Court went one step further and clarified that any extraneous information in the disclosure forms, no matter how closely related, violates the FRCA and ICRAA.

2. Clear Language is Required

The ruling in Gilberg also contains a reminder that the disclosure language required by the FRCA and ICRAA must be “clear and conspicuous.”  In Gilberg the Ninth Circuit examined the language in the disclosure and held that the particular disclosure used by the employer, while conspicuous, was not “clear” as required by the FRCA and ICRAA. 

The Ninth Circuit found that the form was not reasonably understandable as it was vague and confusing.  A portion of the form stated that the notice and authorization was “all encompassing” but did not provide any explanation or definition for this phrase.  Further, the court found the inclusion of state disclosures for Maine and New York confusing since they indicated they applied “only” to residents of those states but reiterated rights under the FRCA and ICRAA.

3. Guidance and Takeaway

At this point, the Gilberg ruling is not yet final and may be revised or reversed.  Defendants in the case have indicated they will be filing a petition for hearing en banc.  Until the decision is final, employers should consider evaluating their background investigation forms to identify deficiencies but should proceed with caution. 

When evaluating the impact of Gilberg, employers who wish to obtain information about applicants and employees from consumer reporting agencies should consider re-examining their disclosure forms to determine if they meet the following requirements:

  1. The disclosure required by the FRCA should be on a separate document with no other language other than the authorization language required or explicitly permitted by the FRCA.  See 15 U.S.C. § 1681b(b)(2)(A(ii).
  2. The disclosure required by the ICRAA should be on a separate document with no other language other than that required by the ICRAA.
  3. The disclosure language included on the ICRAA and FRCA forms must be straightforward and clear.  Confusing and vague language should be revised.
  4.  Additional required disclosures for separate statutes should not be included on either the FRCA or ICRAA disclosures but on different documents drafted to comply with the requirements for those statutes.

For questions regarding Gilberg ruling and any required changes to your disclosure forms, please contact Mark Saxon or Jennifer Martin in the San Diego Office Employment Law practice group at Gordon Rees Scully Mansukhani.


Employment Law

Mark A. Saxon



Employment Law