Under both the federal Fair Credit Reporting Act (FCRA) and California Investigative Consumer Reporting Agencies Act (ICRAA), before obtaining a credit report on a job applicant, an employer must first give the applicant a “clear and conspicuous” written disclosure in a document consisting “solely” of the disclosure that the employer may obtain a credit report.

Though the two laws’ requirements are identical, the two disclosures must be on separate pages.  A single document combining both disclosures is not “solely” the disclosure each law requires and thus violating both laws.  So the Ninth Circuit recently held in Gilberg v. California Check Cashing Stores, LLC No. 17-16263, 2019 U.S. App. LEXIS 2940 (9th Cir. Jan. 29, 2019).

Gilberg also gave some guidance on the “clear and conspicuous” requirement.  The employer’s disclosure satisfied the conspicuous requirement even though it was in Arial Narrow 8 point font because the disclosure was appropriately labeled so the job applicant could see what she was signing and headings for each section were capitalized, bolded and underlined to help the applicant understand the disclosure’s purpose.

However, conspicuous alone is insufficient.  The disclosure must be clear as well.  The employer’s disclosure was not clear because it combined state and federal disclosures in a manner that might mislead a job applicant from one state to believe she was not entitled to rights the notice disclosed as applicable only to other states’ residents.  Also, the botched grammar of one key sentence left it unclear whether there were limits to the supposedly “all-encompassing” nature of the consent to use of consumer reports, and if so, what they were.

The takeaways?  Don’t save trees.  California and federal disclosures must be on separate pages, each containing no other information.  The disclosure must be appropriately labeled, with headings in different type to help the job applicant understand the disclosure’s purpose.  The disclosure should also be proofread for grammar and clarity.

These simple steps can save an employer thousands in potential liability and attorneys’ fees.  The risk for the employer cannot be understated as both FCRA and the ICRAA provide for the recovery of actual or statutory damages, punitive damages, and attorneys’ fees.

For more information on credit report disclosures, handbook compliance, or any employment compliance issues, contact Genevieve R. Walser-Jolly at (949) 225-7209, grw@severson.com; or Rhonda L. Nelson at (415) 677-5502, rln@severson.com.