Reardon v. ClosetMaid: Small Mistakes Can Lead to Big Liability for Employers

In an opinion issued last month, the U.S. District Court for the Western District of Pennsylvania held that failing to strictly adhere to disclosure requirements under the Fair Credit Reporting Act (“FCRA”) can turn a seemingly minor drafting issue into some major liability for employers. In Reardon v. ClosetMaid Corporation, No. 2:08-CV-01730 (W.D. Pa. Dec. 2, 2013) (available here), employer-defendant ClosetMaid had a practice of routinely requesting consumer credit reports of potential employees. Under such circumstances, FCRA requires a potential employer to give an applicant a FCRA disclosure and obtain his or her authorization to pull the report. Under Section 1681b(b)(2)(A)(i) of the FCRA, the disclosure must be a standalone document, but it may also include the authorization.

ClosetMaid presented applicants with a combined FCRA disclosure/authorization form which also contained a liability waiver. Unfortunately for ClosetMaid, the court held that the presence of the waiver rendered the entire document noncompliant under the FCRA. The court also found that the inclusion of the waiver was willful, making the company liable for hefty statutory damages — the estimated 1,800 class members could each receive the greater of his or her actual damages or $1,000 plus attorneys’ fees.