"Standalone Disclosure" is Focus in California Court FCRA Case

Northern District of California concludes that employer failed to meet the Fair Credit Reporting Act (FCRA) guidelines pertaining to the standalone disclosure requirement.

In Arnold, et al. v. DMG Mori USA, Inc., former employees of DMG Mori USA, Inc. ("DMG"), filed a class action claiming that as part of the background screening process, DMG presented individuals with disclosure forms that violated the FCRA. The plaintiff argued that the disclosure for employment screening purposes was not "in a document that consists solely of the disclosure" (otherwise referred to as the standalone disclosure requirement).

Ultimately, the court determined that DMG's disclosure form did not meet the FCRA requirements because it included a description of consumer rights under California, Maine, Minnesota, New York, Oklahoma, Oregon and Washington state consumer reporting laws. Even upon revising the document (which omitted state law references), the form still remained out of compliance with the standalone disclosure requirement because it included information about: (1) the right to request whether a consumer report had been conducted on the subject and (2) the right to request a copy of the report.

The court granted summary judgment for the plaintiffs and found that DMG's violations were "willful." Parties were referred to schedule a settlement conference by the court, the outcome of which will include damages ranging from $100 to $1,000 per class member. A precise number of class members was not available, but it is estimated to be between 668 and 1,138 members.

The outcome of this case serves as a reminder that employers, as users of background check reports, are responsible to provide a legally sufficient disclosure and authorization form under the FCRA. Additionally, employers are encouraged to ensure legal counsel reviews FCRA disclosure and authorization documents and language.

Posted: June 7, 2021

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This document and/or presentation is provided as a service to our customers. Its contents are designed solely for informational purposes, and should not be inferred or understood as legal advice or binding case law, nor shared with any third parties. Persons in need of legal assistance should seek the advice of competent legal counsel. Although care has been taken in preparation of these materials, we cannot guarantee the accuracy, currency or completeness of the information contained within it. Anyone using this information does so at his or her own risk.

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