In a case presenting a question of first impression in the federal courts of appeals, the Ninth Circuit has held that a prospective employer violates the Fair Credit Reporting Act (FCRA) when it procures a job applicant's consumer report after including a liability waiver in the same document as the statutorily mandated disclosure. The court’s January 20, 2017, opinion also held that, in light of the clear statutory language that the disclosure document must consist "solely" of the disclosure, a prospective employer’s violation of the FCRA is "willful" when the employer includes terms in addition to the disclosure before procuring a consumer report or causing one to be procured.

In Syed v. M-I, LLC, Syed applied for a job with M-I, and M-I provided him with a document labeled "Pre-employment Disclosure Release." The Disclosure Release informed Syed that his credit history and other information could be collected and used as a basis for the employment decision, authorized M-I to procure Syed’s consumer report, and stipulated that, by signing the document, Syed was waiving his rights to sue M-I and its agents for violations of the FCRA.

Syed alleged that the Disclosure Release failed to satisfy the disclosure requirements mandated by the FCRA. The FCRA's disclosure requirements, encompassed in 15 U.S.C.
§ 1681b(b)(2)(A), require that a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless:

• a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and
• the consumer has authorized in writing (which authorization may be made on the document referred to [above]) the procurement of the report by that person.

The Ninth Circuit concluded that the inclusion of the liability waiver violated this provision, as the statute unambiguously requires a document that "consists solely of the disclosure." The court further found that, regardless of M-I's subjective interpretation of the FCRA, it acted in reckless disregard of its statutory duty. Thus, M-I willfully violated the statute and subjected itself to statutory and punitive damages. This decision confirms the position taken by the Federal Trade Commission on this issue: that the FCRA bars the inclusion of a liability waiver on the same document as the statutorily mandated disclosure.

Employers attempting to insulate themselves from liability in connection with procuring a consumer report should review their FCRA disclosures to ensure a release of liability is not included in the disclosure. The FCRA disclosure must consist solely of the disclosure with no additional terms or information.