Background Check Disclosure Lawsuit – Did Employer Violate the FCRA?

By The Kim Law Firm, LLC

Given advances in technology, it is become common place for many consent forms and disclosures to be provided and signed electronically.  However, many times, businesses fail to conform technology to the law. For instance, the Fair Credit Reporting Act (FCRA) requires employers to provide a background check disclosure and consent form together on a single document.  At first blush, this requirement seems straightforward; however when a physical document becomes a web page that outlines a disclosure and consent form to be electronically signed or checked, application of the law becomes more involved.

Is a Web Page a Single Document?

In Martinez v. Sephora USA, Inc., the Honorable Yvonne Gonzalez Rogers of the Northern District of California was confronted with this exact issue: what a single “document” is in the context of an online background check system.  In Martinez, the plaintiff alleged that a web page is a single document – and because of that fact – Sephora’s inclusion of a “certification and release” on the same web page as the background check disclosure violated the FCRA’s “single document” or “solely of the disclosure” requirement. 

However, Sephora argued in its motion for judgment on the pleadings that the “solely of the disclosure” requirement under the FCRA was not violated because the term “solely” is “more flexible than at first it may appear.”  In other words, Sephora argued that the plain meaning of “solely” in the FCRA does not mean what it appears to mean, and other items may be included in the same web page, even if the web page is considered a single document.  The argument of Sephora makes little sense given the plain meaning of the word solely, as well as the certain purpose behind that provision of the FCRA, which is, to ensure that the “disclosure” is obvious and visible so that consumers would immediately know the sensitive information that Sephora would be gaining access to from plaintiff.

The Court ultimately denied Sephora’s motion by determining, among other things, that the question of whether a web page equals a single document under the FCRA to be unclear because a lack of authority cited by either party on the issue.  The Court did determine, however, that if a web page is considered a single document, then Sephora did violate the FCRA by also including a “certification and release” on the same page as the disclosure.

If the disclosure you signed was buried in something else

The disclosure that a background check will be run has to be a document consisting solely of the disclosure — not a paragraph inside an application, and not a page that also carries a release of liability, which is what the Sephora court was asked about. Keep the form you signed, or ask the employer or the screening company for a copy; the form itself is the evidence. The same statute requires, before an employer acts on the report, a copy of it and a summary of your rights, and that is the window in which a wrong record can still be corrected: what to do when an offer is pulled after the background check sets out both notices. An employer that skips the standalone disclosure or the pre-adverse action notice is liable under the Act: actual damages for a negligent violation, and statutory damages of $100 to $1,000 per violation plus punitive damages where the violation was willful. An FCRA claim must be filed within two years of the day you discovered the violation, and never more than five years after it happened. I review the file at no cost and bring these cases on contingency: you pay nothing unless we win. Every figure in the Act, with its section number, is collected on FCRA by the Numbers.

Sources: 15 U.S.C. § 1681b(b)(2)(A) (standalone disclosure and authorization) and § 1681b(b)(3) (pre-adverse action notice), §§ 1681n, 1681o and 1681p; Federal Trade Commission and Equal Employment Opportunity Commission, Background Checks: What Employers Need to Know (2014).

Every rule and deadline the Act sets for employment and tenant screening, with its section number, is collected on one page: Background Checks by the Numbers.

Admitted in Pennsylvania and New Jersey; available to appear pro hac vice in other federal courts.

Where the disclosure form usually comes from

The standalone disclosure and written authorization an employer hands you before ordering a report is rarely drafted by that employer. It is almost always supplied by the screening company, embedded in the vendor’s applicant portal, and reused across every client on that platform. That matters when a form turns out to be defective, because a single template with extraneous language buried in it can affect thousands of applicants at once, which is exactly the pattern that produces class claims rather than individual ones.

• HireRight — an agency whose applicant portal collects authorizations at scale.
• Sterling — supplies both the screening product and the intake paperwork around it.
• Checkr — onboards applicants through its own workflow for platform employers.
• GoodHire — provides templated compliance documents to smaller clients.
• Orange Tree — runs applicant-facing intake for the employers it serves.
• IntelliCorp — a vendor whose reports and forms move together through client systems.

Save every screen and document you signed during onboarding, including the vendor-branded portal pages, because the exact wording of the disclosure is the evidence in a claim like this. Note whether the authorization was truly standalone or bundled with a liability waiver, an arbitration clause or other application language. Those details decide whether a technical violation occurred, and because the same form typically reaches every applicant on the platform, one defective template can support a claim far larger than a single hire.