The 9th Circuit Court of Appeals’ ruling on Friday, January 20, 2017 opened the flood gates for litigation brought against employers for non-compliant disclosure and authorization forms. Syed v. M-I, LLC is the case that became the model for plaintiffs’ attorneys to use when alleging violations of the Fair Credit Reporting Act (FCRA).
Sarmad Syed applied for employment with M-I, LLC. Pursuant to their hiring policy, Syed completed a disclosure and authorization forms, granting the organization the opportunity to conduct a background check. The language in the disclosure form released the employer from all liability that arose from their inquiries. This means that if any inaccurate information like a criminal record or drug test is reported, the employer would assume no responsibility when using that information as hiring criteria.
The complaint further alleged, “The inclusion of the liability release clause in DEFENDANT’s authorization forms invalidates the purported consent and also triggers statutory damages under the FCRA in the amount of up to $1,000 for each applicant that DEFENDANT obtained a consumer report without a facially valid authorization, as well as punitive damages, equitable relief, and attorneys’ fees and costs.”
Employers must review their disclosure and authorization forms to ensure there is no mention of a release of liability due to the information being reported. Furthermore, employers should audit their service agreement with their background screening vendor to identify any release of liability by the background screening company. This way, if the employer is sued due to information provided by the background screening vendor, the vendor will not be held liable.