Stanford University Sued for Improper Disclosure Forms

improper disclosure formsEmployers are still being held liable for violating the Fair Credit Reporting Act (FCRA). When it came down to “providing a clear and conspicuous disclosure in writing in a standalone document before the report has been pulled that a consumer report may be obtained for employment purposes; and obtaining authorization in writing from a consumer for whom a report will be procured,” Stanford University was found to not be in compliance with the rules set by the FCRA due to their improper disclosure forms.

A class action lawsuit was filed against the prestigious university by plaintiff Theresa Richard, an employee of the University’s residential and dining enterprises. Ms. Richards completed the standard employment application during the hiring process, which allowed Stanford University to procure a “consumer report” in order to ensure employment suitability with the University.

The plaintiff claims that the following language was on the defendant’s disclosure form:

“I authorize a thorough investigation of my prior employment, education background, criminal record, and where applicable to a position, credit check and/or driving record. I agree to cooperate in such an investigation, to execute any consent forms required in connection with those investigations, and release form [sic] all liability and responsibility all persons or entities requesting or supplying such information. I understand that employment is conditional based on investigation results.”

Under the FCRA 15 U.S.C. 1681b(b)(2)(A)(i) and (ii), it is unlawful to procure a background without providing a disclosure that is clear and conspicuous in a standalone document that a consumer report may be obtained for employment purposes. Nothing in the above consent from Stanford University discloses that the report will be used for employment purposes. Instead, it contains extraneous language such as “thorough investigation” and of course the infamous “release form [sic] all liability and responsibility all persons or entities requesting or supplying such information.”

The lawsuit specifically indicated that because the defendant “unlawfully included extraneous information in its standard form permitting defendant to obtain a consumer report verifying plaintiff’s background and experience, plaintiff was confused by the standard form document and did not understand that defendant would be requesting a ‘consumer report’ as defined in the FCRA.”

The disclosure form must not contain additional language outside what is permitted by the FCRA. For example, a Release of Liability Form is meant to inform the applicant that whatever happens during the background screening process (whether the person is hired or not based on the results of the background check), the employer nor background screening company will not be held liable. Even if the information on the background report is inaccurate and not up to date (another requirement of the FCRA), the consumer has no legal action or recourse to hold the employer or background screening company liable.

Employers that utilize a third-party to conduct employment background checks that require a disclosure and authorization must ensure that their disclosure forms are in compliance. Otherwise, they will face potential lawsuit.

As a reminder, there will also be applicants that are aware of this law regarding improper disclosure forms and will try to identify employers not in compliance in hopes of being able to bring a class action law suit. Employers must carefully review their disclosure forms to ensure compliance with this specific section of the FCRA.