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Liability Release Language in Forms Authorizing Background Checks Can Land Employers in Hot Water

By: Montserrat Miller

Submitted by Firm:
Arnall Golden Gregory LLP
Firm Contacts:
Edward Cadagin, Henry M. Perlowski, Teri A. Simmons
Article Type:
Legal Update
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A class action lawsuit has been filed against Whole Foods Market alleging violations of the Fair Credit Reporting Act (FCRA) in the U.S. District Court Northern District of California (Gezahegne v. Whole Foods Market California, Inc.; 4:14-cv-00592).

The complaint alleges Whole Foods Market obtained consumer reports without a valid disclosure and authorization due to extraneous language in the notice.  The complaint alleges the following:

  • Plaintiff and other similarly situated individuals executed online authorization forms to obtain a consumer report as part of the employment application process from January 2009 to present. 
  • The disclosure and authorization forms are invalid because Whole Foods Market included liability release language and therefore the forms did not “consist solely of the disclosure.” 
  • Not only are the forms invalid, but the actions by Whole Foods Market trigger statutory damages in the amount of up to $1,000/individual for whom a consumer report was procured based on the form.

The relevant language of the form reads, “I hereby authorize Whole Foods Market to thoroughly investigate my references, work record, education and other matters related to my suitability for employment and, further, authorize the references I have listed to disclose to the company any and all letters, reports, and other information related to my work records, without giving me prior notice of such disclosure.  In addition, I hereby release the company, my former employers and all other persons, corporations, partnerships and associations from any and all claims, demands or liabilities arising out of or in any way related to such investigation or disclosure (emphasis added).” 

Interestingly, there appear to be two different disclosure and authorization forms, one completed online and another in person, later in the interview process.  The lawsuit alleges the online disclosure and authorization form is deficient and that the second form does not correct any alleged deficiencies.

The complaint alleges violations of the FCRA requirement that prior to procuring a consumer report on an applicant for employment an employer provide a clear and conspicuous disclosure and obtain the applicant’s written authorization. Furthermore, that the disclosure consist solely of the disclosure. (FCRA section 604(b)(2)).

The courts will decide this particular matter and this matter is in the early stages as it was filed just this month.  As a general rule, employers should be cognizant of their disclosure and authorization form as releases of liability or disclaimers regarding the consumer reports can be problematic.  The FCRA places responsibility for the disclosure and authorization form on the employer.  In some instances, background screening companies may handle such for an employer, but the ultimate responsibility for the form lies with the user procuring the report or causing the report to be procured.