In Lagos v. The Leland Stanford Junior University, the plaintiff alleged the defendant’s background check disclosure violated the Fair Credit Reporting Act because it included notices regarding background checks required under state law. The court declined to dismiss the Plaintiff’s claim at the pleading stage, finding the existence of these state law notices could constitute a willful violation of the FCRA.
The FCRA requires an employer to provide an applicant, before procuring a background check, with a clear and conspicuous disclosure that a background check may be obtained for employment purposes, that consists solely of the disclosure. Most of the litigation in this area focuses on whether the disclosure provided to the applicant consists “solely of the disclosure.” The plaintiff in Lagos alleged the defendant violated this provision because its disclosure form included “seven state law notices informing consumers of their additional rights under state law.”
According to the court, an employer can include certain information in the FCRA disclosure if it is “closely related” to the statutorily required disclosure and serves to “focus the consumer’s attention on the disclosure.” The court found, however, that the state law disclosures were not “closely related” to the FCRA disclosure. In the court’s view, the “state law notices provide information about applicants’ rights under the laws of seven states, not under the FCRA.” As a result, the existence of these notices created a “facially plausible claim” of a willful violation of the FCRA.
The Lagos decision serves as another reminder to employers to revisit whether their background check disclosure forms are FCRA compliant. Troutman Sanders LLP has substantial experience in counseling employers on disclosure form documents under the FCRA, as well as experience in litigating challenges to such claims. We will continue to monitor this and similar cases.