Businesses are increasingly required to provide disclosures here in San Diego and across the country. As we have discussed here, the California Consumer Privacy Act was passed in 2018 and contains many disclosure requirements. Warning labels on packaging is another example of businesses being required to make disclosures that are required by California law.

Numerous disclosure requirements have been common for many years in the labor and employment field. In many respects, the popularity of employee handbooks can be attributed to the number of disclosures that are now required. Administratively, it is very convenient to bind all of the disclosures into a book. However, a recent decision from the US Ninth Circuit Court of Appeals up in San Francisco provides a reminder that close attention must be paid to the statutory requirements. It may be that a reflexive binding of disclosures into a handbook may be a non-compliant based on a close reading of what any given statute requires. Your business should obtain the advice and counsel of an experienced San Diego corporate attorney with respect to your employee handbook.

The decision under discussion was handed down in Gilberg v. California Check Cashing Stores, LLC, Case No. 17-16263 (US 9th Cir. January 29, 2019). In that case, the court reversed summary judgment that had been granted by the lower court to the defendant/employer. At issue were disclosures that are required under the federal Fair Credit Reporting Act. See 15 U.S.C. 1681b(b)(2)(A)(i). Essentially, the Act requires that, if a potential employer plans to pull a credit report for a decision about hiring an applicant, certain disclosures must be given to the applicant. The disclosure must be:

• Clear
• Conspicuous AND
• Be contained on a “standalone document”

In Gilberg, the court held that the disclosure at issue was conspicuous (because the disclosures were in boldface and in a sufficiently large font). However, the court held that the disclosures were not clear and violated the “standalone document requirement.” The disclosure contained more information that was required by the Fair Credit Reporting Act. In particular, the disclosure at issue contained information required by Maine and New York disclosure laws. The plaintiff, Gilberg, argued that this extra information about Maine and New York laws violated the Act’s stand-alone document requirement. The 9th Circuit agreed with the argument and held that the case had to be returned to the trial court for further proceedings. The case was filed as a class action, so the case might be costly to the defendant.

Note that California has a statute requiring a similar set of disclosures regarding use of credit reports. See Cal. Civil Code, § 1785.20(5)(a); §1786.16(a)(2)(B). The California version also has a standalone document requirement. The Gilberg decision held that the defendant’s disclosure form also violated the California statute.

There are a couple of legal lessons here. If a statute required a standalone document, then your business must provide a standalone document. Do not mix disclosures on one document. It may be convenient, but it might not be compliant. Thus, with respect to using credit reports, here in California, the best business and legal practice is to have two disclosures; one for the federal and one for the California version.

In addition, if there is a standalone document requirement, it is best not to bundle the disclosures into your employee handbook.

Contact San Diego Corporate Law Today

For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email. Mr. Leonard can help with employee-related matters such as employment contracts, drafting and/or reviewing company employee policies and procedures, creating and/or updating employee handbooks, and more. Like us on Facebook.

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