Dive Brief:

• A plaintiff whose job offer at a supermarket was rescinded following the results of a background check can proceed, in part, with his claim under the federal Fair Credit Reporting Act (FCRA) (Walker v. Fred Meyer, Inc., No. 18-35592 (9th Cir. March 20, 2020)). 
• Daniel Walker received a conditional job offer as an associate at a Fred Meyer store in Portland, Oregon. The offer was revoked following a background check, and the grocer told him it was unable to provide him with an explanation of the decision. Walker sued, claiming, among other things, that the FCRA disclosure form was unclear and "encumbered by extraneous information" and a district court dismissed his claims.
• On appeal, the 9th U.S. Circuit Court of Appeals said "a disclosure form violates the FCRA’s standalone requirement if it contains any extraneous information beyond the disclosure required by the FCRA," but that some "concise explanation" may be included, such as what a consumer report entails, how it will be obtained, and what type of employment purposes it could be used for. The 9th Circuit said the notice violated the law's standalone disclosure requirement and also remanded the case for the district court to determine whether some of the language in the disclosure satisfied the "clear and conspicuous" requirement.

Dive Insight:

Except for certain restrictions relating to protected characteristics and information (such as medical and genetic information), employers are generally free to require a background check on job applicants, according to the federal Federal Trade Commission (FTC) and the U.S. Equal Employment Opportunity Commission (EEOC). 

However, employers must be careful to treat all applicants equally and not discriminate on the basis of sex, race, religion, or other protected characteristics. Additionally, the FCRA has very specific requirements for employers requesting credit checks or criminal background reports. For example:

• Employers must tell the applicant or employee the information may be used for employment-related decisions. This notice must be in writing and in a standalone format. "The notice can’t 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 doesn’t confuse or detract from the notice," according to the FTC.
• If an employer requests an "investigative report" — one based on personal interviews concerning character, general reputation, personal characteristics and lifestyle — the person must be informed about his or her right to a description of the nature and scope of the investigation.
• The applicant or employee must provide written permission for the background check before it is performed. 

Employers also must certify to the company providing the report that they: notified the person and received permission; complied with all FCRA requirements; and did not discriminate against the individual or otherwise misuse the information in violation of federal or state law. 

Before taking adverse action (such as non-hire or termination) on the basis of a background check, the employer must ensure that the applicant or employee is given a copy of the report and a notice of rights under the FCRA. 

After the adverse action is taken, the applicant or employee must be told (orally, in writing or electronically):

• That he or she was rejected because of information in the report;
• The name, address, and phone number of the company that sold the report;
• That the company selling the report didn’t make the hiring decision, and can’t give specific reasons for it; and
• That he or she has a right to dispute the report, and to get an additional free report within 60 days.

Given these stringent requirements, companies that conduct background checks on their own do so at their peril, experts previously told HR Dive.