Questions Around “Willfulness” in FCRA Violations

Employer missteps during the background check process can result in legal action. As we’ve seen before, this often is the result of allegedly failing to meet the Fair Credit Reporting Act’s (FCRA) disclosure and authorization requirements, including:

1. Not providing the applicant/employee with a clear and conspicuous disclosure, in a document that consists solely of the disclosure, that the employer may obtain a Consumer Report about them for employment purposes.

2. Not getting the applicant/employee’s written authorization for the employer to obtain the Consumer Report.

We have previously covered examples where employers are accused of not meeting the FCRA disclosure and authorization requirements. Amazon, Fred Meyer, and DMG Mori are just some examples of companies that have faced lawsuits alleging violations of the FCRA. Here is an example of an extraneous information case.

Hebert v. Barnes & Noble, Inc.

A California Appeals Court recently reversed a trial court decision that had granted summary judgment in favor of bookstore chain Barnes & Noble, Inc. The appellate court held that there is a triable issue of whether the employer willfully violated the FCRA’s standalone disclosure requirement.

The case stems from job candidate Vicki Hebert. She applied to work for the company in 2018. During her application process, Hebert received a disclosure. Additionally, she gave Barnes & Noble authorization to complete a background check. The disclosure form included a paragraph that stated:

“Please note: Nothing contained herein should be construed as legal advice or guidance. Employers should consult their own counsel about their compliance responsibilities under the FCRA and applicable state law. First Advantage expressly disclaims any warranties or responsibility, or damages associated with or arising out of information provided herein.”

Hebert alleged that this paragraph is extraneous information in violation of the FCRA.

Trial Court Judgment

Barnes & Noble moved for summary judgment. It claimed that Hebert could not establish one of the elements of her case, namely that Barnes & Noble’s violation of the standalone disclosure requirement was willful. It argued that the extraneous language in the disclosure was the result of an inadvertent drafting error that occurred while it was revising the disclosure to ensure FCRA compliance. In addition, it argued that it reasonably and in good faith relied on the advice of outside legal counsel when it included the extraneous language in its disclosure, thus precluding a finding of willfulness.

The trial court agreed with the employer and granted Barnes & Noble’s motion for summary judgment. The trial court held that Hebert couldn’t establish willfulness because “the facts here show[ed] nothing more than a mistake.”

Hebert Appeals

A California appellate court overturned the trial court’s ruling.

“Unlike the trial court, we conclude Hebert adduced sufficient evidence from which a reasonable jury could indeed find that Barnes & Noble’s alleged FCRA violation was willful.”

The court relied upon the following in reaching its holding:

• The inclusion of extraneous language in Barnes & Noble’s disclosure form and its o “ostensible violation” of the FCRA’s “unambiguous prohibition” indicates willfulness under established case law.
• There is evidence that at least one Barnes & Noble employee was aware that the disclosure included extraneous language.
• A reasonable jury could find that Barnes & Noble acted recklessly by delegating all of its FCRA compliance responsibilities to a human resources employee who, by his own admission, knew very little about the FCRA. And, under the law, reckless statutory violations constitute willfulness under the FCRA.
• A reasonable jury could conclude Barnes & Noble took excessive risks by allowing its final disclosure form to go live without any form of review or oversight.
• A reasonable jury could find that Barnes & Noble was reckless by failing to provide adequate FCRA training to its employees, who bore responsibility for ensuring its FCRA compliance.
• Barnes & Noble’s continuous use of the allegedly problematic disclosure for nearly two years suggests it lacked a proactive monitoring system to ensure its disclosure was FCRA compliant. A reasonable jury could rely upon the absence of such a monitoring system to constitute recklessness.

Collectively, the appellate court held the evidence is sufficient to allow a jury to decide whether Barnes & Noble’s purported FCRA violation is “willful.”  It remanded the case back to the district court, where Barnes & Noble will have to defend against the claims. Notably, Hebert is attempting to sue on behalf of all individuals for who Barnes & Noble procured a consumer report in the preceding five years.

This case introduces additional analysis on what “willfulness” means related to FCRA violations. That is important because a finding of willfulness allows a plaintiff to recover statutory damages ranging from $100 to $1,000, punitive damages, and attorney’s fees and costs. An affected consumer would only be entitled to actual damages for a negligent violation. Employers may want to review their documents with their legal teams to ensure they are meeting their legal requirements.