United States: Ninth Circuit Ruling Bars Liability Waivers In Employers' FCRA Background Check Disclosure Forms

The Ninth Circuit recently became the first appellate court in the country to rule that an employer's inclusion of a liability waiver in a background check disclosure is a willful violation of the Fair Credit Reporting Act (FCRA).

U.S. Code, Title 15, section 1681b(b)(2)(A) provides that any employer that wishes to obtain a background check report on an individual through a consumer reporting agency must first make a "clear and conspicuous" written disclosure to the individual that a background check report may be obtained on him or her. This section says written disclosure must be made in a document consisting "solely" of the disclosure (hereinafter referred to as the "'sole disclosure' requirement"). The employer must also obtain written consent, or authorization, from the individual before it may procure a background check report on him or her.

In recent years, the number of class action lawsuits brought under the FCRA against employers has risen dramatically. The most common types of claims are those alleging noncompliance with the "sole disclosure" requirement, including claims that an employer's inclusion of a liability waiver in a disclosure form was a willful violation of the "sole disclosure" requirement. While the Federal Trade Commission (FTC) opined in a 1998 advisory letter that including a liability waiver in a background check disclosure violated the "sole disclosure" requirement under the statute, FTC advisory letters are not binding on any court. Absent any controlling authority on the issue, federal district courts had been in disagreement as to whether the inclusion of a liability waiver in a disclosure form constituted a willful violation of the statute.

Syed v. M-I, LLC Decision

On January 20, 2017, the Ninth Circuit ruled in Syed v. M-I, LLC, — F.3d —, No. 14-17186, (9th Cir. Jan. 20, 2017) that an employer willfully violated the FCRA when it included a liability waiver in its FCRA disclosure form.

In applying for a job with M-I, LLC, Mr. Syed signed a "Pre-Employment Disclosure Release" provided by M-I, which advised him that his credit history and other information may be collected by the company for the purposes of employment screening. The form authorized M-I to order a background check report on Mr. Syed through a consumer reporting agency and further stated that the applicant or employee would be waiving his rights to sue the employer and its agents for violations of the FCRA. Mr. Syed signed the authorization form. After learning that M-I had run a background check report on him, Mr. Syed brought a class action lawsuit against M-I in the United States District Court for the Eastern District of California alleging that M-I's inclusion of a liability waiver in its disclosure form was a willful violation of the FCRA's "sole disclosure" requirement.

In response to the Class Action Complaint, M-I moved to dismiss the case, arguing that Mr. Syed's lawsuit failed to allege sufficient facts to state a claim for a willful violation of the FCRA. M-I argued that the legal standard for "willfulness" requires a violation of an unambiguous statutory requirement, and that the subsection of the FCRA setting forth the "sole disclosure" requirements was too uncertain to find that a willful violation had occurred. The district court agreed with M-I that the law was too uncertain at the time M-I issued the disclosure and dismissed Mr. Syed's lawsuit accordingly.

On January 20, 2017, the Ninth Circuit reversed the judgment and reinstated the lawsuit, finding that a lack of guidance from courts and administrative agencies did not render the company's interpretation "objectively reasonable." Rather, because the statutory language of section 1681b(b)(2)(A) plainly states that the disclosure document must consist "solely" of the disclosure, the statute is clear that the disclosure must not include any additional terms beyond what is mandated by the statute. The only recognized exception is Congress's 1998 amendment to the statute expressly allowing the authorization for the procurement of the report to be made on the same document as the disclosure. In light of this finding, the court held that an employer's inclusion of any terms beyond the mandatory disclosure language, such as the inclusion of a liability waiver, is a willful violation of the FCRA's "sole disclosure" requirement.

Mr. Syed did not seek actual damages in this case. As the Court noted, statutory and punitive damages are available under the FCRA only where a defendant "willfully fails to comply" with the statute, as provided in U.S. Code, Title 15, section1681n(a). As a result, such a violation of the "sole disclosure" requirement could lead to statutory damages and punitive damages, although the latter are not frequently awarded, even if the plaintiff cannot establish any specific harm. Other damages and costs may apply depending on the facts and circumstances.

Potential Damages for Willful Violations of the FCRA

The FCRA provides multiple possibilities for a plaintiff to recover damages. For each willful violation of the statute, a plaintiff may recover either his or her actual damages caused by the violation or statutory damages between $100 and $1,000. A plaintiff could also potentially receive punitive damages for each willful violation of the statute. In order to recover statutory or punitive damages for a willful violation under the statute, plaintiffs need not prove that they suffered any harm as a result of the violation—only that a violation occurred. Finally, a plaintiff may also recover attorney's fees and costs.

Moreover, the statute of limitations for FCRA claims is two years after the individual discovers the violation or five years after a violation occurs, whichever is earlier. In claims alleging noncompliance with the "sole disclosure" requirement of the statute, it is common for the five-year limitations period to apply, as employees are not typically notified that a background check report was run on them unless an issue with the report arises.

Because of the five-year period, FCRA class actions can often involve large numbers of putative class members, since a putative class generally encompasses every applicant or employee on whom the employer ran a background check report within the past five years. For example, an employer who provided a deficient FCRA disclosure to one employee likely provided the same deficient disclosure to all new hires within the last five years. Depending on the size of the company and whether the company runs background checks on all of its new hires, the potential liability to an employer for willful noncompliance of the FCRA can be substantial, given that the statutory damages range of $100 to $1,000 is calculated per class member and per violation going back five years, and punitive damages are also available under the statute.

Recommendations for Employers

Following the Ninth Circuit's ruling in Syed, employers who run background checks on applicants, current employees, contractors, and volunteers should immediately review their application and onboarding documents to ensure that any background check disclosure and authorization forms do not include any liability waivers or other extraneous terms beyond what is mandated by the FCRA disclosure requirements. Furthermore, employers can minimize their risk by having their hiring forms and background screening policies and procedures audited on an annual basis to ensure compliance with the FCRA, state statutes, and local ban-the-box ordinances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.