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Disclosure Form Compliance – It Could Save You Thousands!

May 21, 2022

By Susan Chance, courtesy of SBAM Approved Partner ASE

What if you could save your company thousands of dollars, or more, and protect its reputation using one simple form? There is no doubt that anyone in an HR position is overworked, and these days many are understaffed; however, when it comes to the disclosure form for background checks, it is imperative that anyone involved in the process takes the time to ensure they are sending forms to their applicants which are FCRA compliant.

ASE, like many background checking providers, have sample forms available for clients. These are just sample forms, and it is the responsibility of the user to ensure the forms meet legal requirements. This is best accomplished by running the forms past their legal counsel and reviewing the final version of the form before using or posting it for use.

The disclosure form is, or should be, as it is meant to be, a form that is short and to the point. The FCRA states that the form must be “clear and conspicuous” and not have any “extraneous information” included. In a recent class action lawsuit, Hebert v. Barnes & Noble, Inc., the plaintiff sued the company because the disclosure form used by Barnes & Noble was a sample form and the company did not remove the disclaimer listed on the sample form they obtained before providing the form to its applicant. Because of the disclaimer being left on the form, the plaintiff made the case that the form contained extraneous information.

Barnes and Noble filed a motion for summary judgment stating that “no reasonable jury could find its alleged FCRA violation was willful.” Their motion was initially granted. That decision was overturned in the Court of Appeals of California, Fourth District, Division One. The appeals court decision was that a reasonable jury could find the violation to be willful.

In this case, the form was reviewed by the company’s in house counsel, who also sent the form to their external legal counsel. The form passed through many hands as both in house counsel and external counsel employees went out on maternity leave and paternity leave respectively.

The disclaimer was initially listed in a foot note and a representative from in house counsel knew the disclaimer was for the business and not for the applicants, so the foot note was not redlined as other information was in the document. When the form was sent for posting, the footnote was not only included, but was also moved to the body of the form and was used over a period of two years.

While, in the end, Barnes and Nobel won the final judgement, it cost the company a lot of time, money, and resources to defend their position. From the surface it may look like they did everything they could to prevent the issue. Afterall, they did check with internal and external counsel. There were at least a couple more steps that could have been taken to help prevent such an issue:

  • The final document should have been reviewed one more time after the redline changes were made before posting/using the form.
  • A process for auditing the documents at least once a year would have prevented the form with the mistake from being used for so long.

Do yourself and your company a favor and review your form and make sure it is FCRA compliant. Once that is done, make sure that anyone in your company who touches the form has the current and compliant form. Isn’t your company’s reputation and resources worth the effort?

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