The Authorization

In the last article we discussed the disclosure to the applicant. You must disclose to your applicant that you are going to obtain their consumer report and that you will use this information as a factor in deciding whether you will employ them.

You can’t, however, stop there. You must obtain written authorization prior to ordering the information. The Federal Trade Commission (FTC) has written in their guidance for employers:

Get written permission from the applicant or employee. This can be part of the document you use to notify the person that you will get a consumer report. If you want the authorization to allow you to get consumer reports throughout the person’s employment, make sure you say so clearly and conspicuously.

In the last article we discussed how lawsuits have exploded against employers for using disclosures and authorizations that are not compliant with the Fair Credit Reporting Act (FCRA) which governs the use of information provided by VICTIG. In particular, employers tend to gum up their disclosures with extraneous information or stipulations. A common mistake is to put a waiver of liability in the disclosure or authorization.

You do not want to have any waiver in the document. “I authorize you to obtain consumer reports on me and also agree to not take action against you if you don’t hire me based on these reports” seems to make sense but is in violation on its face. You disclose to the applicant, you get permission (authorization) from the applicant, and you don’t add other provisions within the disclosure and authorization, or even on the same page of these documents.

Review your authorization document with counsel. VICTIG cannot provide you with legal advice, but we do make available to you a template authorization for your consideration with counsel.

Disclosure to the Applicant

We’d like to take a moment to reiterate something you shouldn’t do when screening applicants. Don’t encumber your disclosure document with extraneous information. The Federal Trade Commission (FTC) has written in their guidance for employers:

Tell the applicant or employee that you might use information in their consumer report for decisions related to their employment. This notice must be in writing and in a stand-alone format. The notice cannot be in an employment application. You can include some minor additional information in the notice, like a brief description of the nature of consumer reports, but only if it does not confuse or detract from the notice.

This sounds simple enough. And yet it is in the top three of areas in which employers are sued in the employment screening process. And these are big employers, some with stables of attorneys. The suits are typically class action suits—you’ve used the same disclosure repeatedly and you have a class of individuals in the action against you. These are expensive suits to defend and settle.

A common thread in many of these suits was that a disclosure and authorization was obtained, but it contained extraneous information rather than the mandated “a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured that consists solely of the disclosure.”

In fact, just to show that the legal system has a sense of humor or is sadistic, depending on your point of view, one of the more common violations was a release of liability from the applicant on the disclosure and authorization to keep the employer out of court.

We advise you to review your disclosure form with your counsel. The law regarding disclosures and authorizations has not changed. What has changed is that there have been many successful, profitable cases and there are plaintiff attorney firms who are scouring the web for bad disclosures and there are professional job applicants applying at these businesses and they have no intention of working for the company.

Review your disclosure with counsel. VICTIG cannot provide you with legal advice, but we do make available to you a template disclosure for your consideration with counsel.