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No Waiver Allowed in Background Check Disclosure Form

Bloomberg BNA Daily Labor Report

23 Jan 2017

Angela Kleine, a partner in Morrison & Foerster’s Financial Services Litigation Group, was quoted in the article “No Waiver Allowed in Background Check Disclosure Form,” published by Bloomberg BNA Daily Labor Report on January 23, 2017. Ms. Kleine commented on the recent U.S. Court of Appeals for the Ninth Circuit ruling that under the Fair Credit Reporting Act, an employer need only inform a job applicant that the company intends to check the applicant’s consumer reports in the hiring process.

“The decision isn't ‘really a surprise’ because the FTC, in its informal guidance letters, previously said the FCRA doesn't allow a waiver to be included in a disclosure form,” said Ms. Kleine.

“Many employers that were putting such waivers in the forms stopped doing so after the FTC addressed the matter,” she added. “But the court's conclusions that an M-I LLC employee who wasn't actually harmed by the form still has standing to sue and that M-I can be sued for a ‘willful’ violation are surprising.”

“The FCRA imposes statutory penalties of $100 to $1,000 per willful violation, so damages could ‘really add up’ if thousands of applicants received the same form and are potential class members,” said Ms. Kleine. “The decision ‘underscores the importance’ of employers reviewing their FCRA-required forms extremely carefully to ensure they comply with the act.”  

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