FCRA Preempts Employee's Defamation and Tortious Interference Claims Against Employer Who Gave Negative Reference to Consumer Reporting Agency

On Tuesday, the Sixth Circuit affirmed an employer’s summary judgment on a defamation and tortious interference claim brought by a former employee who claimed that he had been defamed and prevented from obtaining new employment based on a negative job reference that the defendant employer provided to a consumer reporting agency.   McKenna v. Dillon Transp. LLC, No. 23-5568 (6^th Cir. 4/2/24).  The Court agreed that the plaintiff’s state law claims were pre-empted by the Fair Credit Reporting Act.   The Court rejected the plaintiff’s argument that a similar federal statute governing employment/safety references of commercial drivers provided liability for his claims because it did not specifically pre-empt the FCRA and was compatible with it. 

According to the Court’s opinion, the defendant employer provided information to a consumer reporting agency about the plaintiff after he was fired following an accident in which his tractor trailer overturned.  The agency provides information about drivers to employers who inquire about hiring that driver, but there was no evidence that anyone had ever inquired about the plaintiff.  The plaintiff then sued the employer for defamation and tortious interference, blaming its report for his inability to find another job.  The trial court granted summary judgment to the employer on the grounds that state law claims were preempted by the FCRA.

The Court observed that it had previously held that § 1681t(b)(1)(F)of the FCRA “preempts state common law claims involving a furnisher’s reporting of information to consumer reporting agencies.”  The plaintiff argued that a different federal statute applied.  The DOT requires employers to investigate a driver’s safety record before hiring and the governing statute likewise pre-empts state laws that impose liability upon employers for providing such information.  However, unlike the FCRA, the transportation statute does not exempt employers who knowingly provide false information about a driver’s safety record.

The Court rejected the plaintiff’s argument on a number of grounds.  First, there was no evidence that any employer had requested information about his safety record, which would be necessary to implicate this statute.  Second, it was questionable whether the defendant employer’s statements were “knowingly” false, rather than merely negligently false.   Finally, the Court did not find the transportation statute to necessarily repeal or be inconsistent with the FCRA.  “The two preemption statutes here complement each other, so they can coexist.”

15 U.S.C. § 1681t stops states from regulating false reports to consumer reporting agencies, including agencies that provide background checks. 49 U.S.C. § 508 blocks specific causes of action against those who answer a motor carrier’s request for employment information. One regulates the consumer reporting industry. Another regulates the hiring of commercial drivers. The statutes have different textual purposes and scopes, and neither swallows the other. Communications between motor carriers about driver applicants would only fall under § 508. And only 15 U.S.C. § 1681t would cover cases without a request for records or an individual under consideration for employment. That the FCRA is a more general law that covers more conduct than 49 U.S.C. § 508 doesn’t change this. Greater specificity only matters if two complementary acts cannot be implemented at the same time. . . .  And the statutes do not conflict—one simply provides more protection for companies in Dillon’s position. So we give both statutes full effect rather than resorting to the specific-general canon. Dillon can invoke one preemption clause even if it cannot invoke the other.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Summary of FCRA Rights Issued by CFPB for Amended Identity Theft Rights

In May, Congress amended the Fair Credit Reporting Act to, among other things, provide for a year-long credit freeze (and notice of consumer rights for a credit freeze) for victims of identity theft.   Earlier this month, the CFPB issued an interim final rule and new forms which consumer reporting agencies (CRAs) and employers should use, starting tomorrow, including a new Summary of Your Rights under the Fair Credit Reporting Act (the “Summary of Rights”).  The CFPB is giving CRAs and employers alternatives to complying with the amended FCRA and is asking for public comments on the new forms and interim rule.   While the new credit freeze rules do not apply to many consumer reports, including those obtained for employment and tenant background checks, many entities – including employers – are required to provide the Summary of Rights as amended by the statute.

The new statute – the Economic Growth, Regulatory Relief and Consumer Protection Act  --  requires CRAs to provide the summary of credit freeze rights to consumers who provide notice of identity theft.  However, it also requires the CFPB to amend the Summary of Rights, which has not been updated since 2012.   The Act does NOT require a credit freeze when the consumer report is requested in connection with employment or tenant, or background screening purposes.  15 U.S.C. §1681c-1(i)(4)(I).   Nonetheless, employers remain obligated to provide the Summary of Rights, as they have long been required, before making an adverse determination based on information from a consumer report.

The CFPB is permitting affected parties to continue using the 2012 forms as long as a new notice about credit freeze rights is also included or to begin using the new Summary of Rights form (which has incorporated the new credit freeze rights information).    Some management attorneys have asserted that employers are not required to use the new notice about credit freezes because the new statute only applies to CRAs and the freeze rights do not apply to consumer reports obtained for employment.  Nonetheless, they recognize that class action plaintiff attorneys are likely to bring suit against employers which do not use the new forms, making it cheaper to comply than to fight the new requirement.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney. 

CFPB Issues Corrected FCRA Summary of Rights Form for Employers to Use in 2013

Last week, the Consumer Financial Protection Bureau discreetly published a notice that it was correcting its updates to the forms employers must utilize if they use outside agencies (aka consumer reporting agencies) to conduct background investigations (aka credit checks, etc.) of employees and applicants.  As previously reported here, responsibility for guidance, etc. concerning the Fair Credit Reporting Act transfers to the CFPB on January 1, 2013.  The FCRA requires employers to, among other things, provide applicants and employees with a form Summary of Your Rights Under the Fair Credit Reporting Act before an adverse action and with an adverse action. E.g., 15 U.S.C. § 1681b.  This summary – which is now attached to the regulations as Appendix K --  has been updated to note the change of responsibility to the CFPB and employers were mandated to begin using it by 2013.  

As stated by the CFPB:

The model forms in Appendices I, K, M, and N to the Bureau’s interim final rule contain several typographical or other technical errors [which includes the Summary of Your Rights Under the FCRA]. This document [in the updated notice] corrects those errors and more closely conforms the formatting of the Bureau’s Appendices to those of the FTC.

 . . . The addresses in Appendix K for contacting the Assistant General Counsel for Aviation Enforcement and Proceedings and the Surface Transportation Board have been updated. Typographical errors in the Spanish language translation at the top of Appendices I and K have also been corrected. . . .

To mitigate the impact of these changes on users of the model forms in the Bureau’s Appendices I, K, M, and N published December 21, 2011, the Bureau will regard the use of those model forms to constitute compliance with the FCRA provisions requiring such forms and will regard those forms to be substantially similar to the corrected forms published today, until further notice. The Bureau anticipates providing that further, notice along with ample time to allow for the orderly discontinuation of the December 21, 2011 model forms, when it issues a final rule to restate Regulation V in 2013.

You can read the CFPB official notice and print out the newly corrected forms here.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Employers Must Use New Form of Summary of Your Rights Under the Fair Credit Reporting Act in 2013

[Editor's Note:  The CFPB updated the Summary of Your Rights form to correct technical errors on November 14, 2012.  You can read more here.]

Employers that utilize outside firms (also known as consumer reporting agencies) to conduct background checks of applicants and employees are required to comply with the Fair Credit Reporting Act.   The FCRA requires, among other things, providing applicants and employees with a form Summary of Your Rights Under the Fair Credit Reporting Act before an adverse action and with an adverse action.  E.g., 15 U.S.C. § 1681b. That form has been updated and employers are required to use the new form or substantially similar form before January 1, 2013.

Since the initial passage of the FCRA in 1970, the Federal Trade Commission played the primary role in its implementation, oversight, enforcement, and interpretation. Under the Consumer Financial Protection Act of 2010 (“CFPA”), however, the FTC’s role has been limited to enforcement and the primary responsibility for regulatory and interpretative guidance has been transferred to the newly-created Consumer Financial Protection Bureau (“CFPB”) as of July 21, 2011. On December 21, 2011, the CFPB published an interim final regulation (which has since become a final regulation) to implement the FCRA regulations with technical and conforming changes that reflect the transfer of authority from the FTC to the CFPB.  

The former FTC regulations governing the FCRA are now referred to as Regulation V at the CFPB.  The standard Summary of Your Rights Under the Fair Credit Reporting Act form has been updated to incorporate references to the CFPB and to remove references to the FTC.  12 C.F.R § 1022.1(c).  The summary of rights form can be found as Appendix K to Regulation V (also known as Part 1022).  It is available online.

This and other scintillating pieces of information will be part of my presentation on Investigating Current and Potential Employees at the Lorman Employment Law Update in Ohio in Worthington on December 7, 2012.  Attendees will be eligible for CLE and/or HRCI credit.    You can register here for the seminar.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.