On December 2, 2013, the U.S. District Court for the Western District of Pennsylvania opined on when employers’ deficient disclosures can make them liable under the Fair Credit Reporting Act (“FCRA”) in Reardon v. ClosetMaid Corporation, No. 2:08-CV-01730, 2013 U.S. Dist. LEXIS 169821 (W.D. Pa. Dec. 2, 2013). In this FCRA class action, Plaintiffs, a group of former job applicants, alleged that ClosetMaid had a standard practice of disqualifying job applicants for employment on the basis of their consumer reports in violation of the FCRA. Plaintiffs specifically alleged, among other things, that ClosetMaid did not send them a standalone FCRA disclosure. Instead, most Plaintiffs received a combined FCRA disclosure/authorization that contained a liability waiver. The Court agreed with Plaintiffs that the company’s failure to utilize a standalone FCRA disclosure could, and in this case did, violate the FCRA.
This opinion is important for two reasons. First, Reardon is the second published decision to address whether the inclusion of a liability waiver in an FCRA disclosure invalidates the disclosure. After Reardon, two federal district courts have now held that liability waivers invalidate FCRA disclosures as a matter of law. Only one federal district court has held otherwise. Second, the Reardon case shows how such a simple mistake could subject a large employer that receives thousands of applications and conducts thousands of background checks to significant liability on a class-wide basis.