California Employers and Rules for Employee Background Checks

Employers in California may conduct background checks before hiring and when making employment decisions. However, California law protects consumer privacy and restricts the information that can be provided to employers about potential job candidates. There are two primary state laws regulating the information an employer can obtain on an employee: The Consumer Credit Reporting Agencies Act (CCRAA) and the Investigative Consumer Reporting Agencies Act (ICRAA). Because these state laws have differing requirements, employers must be careful to ensure they are in full compliance with the relevant laws and not infringing upon the privacy of their workers when conducting background investigations. magnifying-glass-1254223

When employers violate consumer privacy rules or make hiring decisions by taking inappropriate private information into account, there can be consequences for the employer. A Los Angeles employment law attorney can provide employees with insight on when hiring, firing, and other job-related decisions can give rise to litigation due to an employer’s inappropriate actions.

California Background Check Requirements for Employers

The Consumer Credit Reporting Agencies Act, codified in California Civil Code § 1785.1, permits credit reporting agencies to provide a consumer credit report about an employee or prospective employment candidate without the written authorization of the employee who is the subject of the investigation. However, the report which can be provided by the agencies should not include “any report containing information solely on a consumer’s character, general reputation, personal characteristics, or mode of living.”

Employers who wish to obtain information on the character, reputation, and characteristics of current or potential employment candidates must comply with the requirements of the Investigative Consumer Reporting Agencies Act (ICRAA), which is codified in California Civil Code Section 1786. This type of report is specifically intended to offer more comprehensive information to employers so they can make more informed choices about hiring decisions. However, before an employer can obtain a report of this nature, the employer must provide a detailed disclosure notice to the employee who is undergoing the investigation. The employee who is being investigated must give written authorization in advance of the employer receiving the report.

When an employer fails to provide notice as required by law or does not obtain written authorization from the employee prior to receiving an investigative consumer report, the employer can be liable for at least $10,000 in damages, plus additional punitive damages and attorney’s fees.

In one recent case, Conner v. First Student, Inc., the plaintiff’s employer, Laidlaw Eduction Services, conducted a background check on Connor. The investigation into Connor included a criminal record check, a search of sex offender registries, and research into employment history, driving history, and address history. A disclosure notice was sent advising each employee a background check would be performed, but Connor sued alleging the notice didn’t satisfy ICRAA requirements because no written authorization was obtained for the check.

The employer moved for summary judgment, arguing there was inadequate notice of whether ICRAA or CCRAA governed since the information obtained could be considered both character information and creditworthiness information. The trial court granted the motion for summary judgment, finding the ICRAA was unenforceable under the circumstances. Connor appealed, however, arguing the plain language of ICRAA made clear it applied to the background checks conducted. Just because CCRAA could also apply didn’t make IRCAA unenforceable or justify disregarding its requirements.

The Court of Appeals in the Second District held there was nothing in ICRAA or CCRAA precluding their concurrent application, and thus summary judgement was inappropriate. The decision reinforces the need for employers to ensure they always comply with notice requirements when IRCAA could apply.

Contact the employment attorneys at Nassiri Law Group, practicing in Orange County, Riverside and Los Angeles. Call 949.375.4734.

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